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20 Gibraltar International www.gibraltarinternational.comThe Stock MarketMarket commentary for 2025Last year was a good year for shares, with the start and middle period faring better than the end period, as confidence that inflation and interest rates were heading decisively lower began to diminish. But with the re-election of Donald Trump and the direction of travel for interest rates still remaining down, we see stock markets returning close to their longterm averages of 10% over the next twelve months. We continue to favour perceived beneficiaries of this political and economic environment such as energy, financials, utilities and real estate.The stock market remains at overweightWe expect the economy to continue expanding in 2025, remaining on a growth path that is supported by low unemployment, strong corporate earnings and an economy bolstered by above-trend government spending. The key, as usual, will be consumer spending, which accounts for approximately two-thirds of overall GDP. At this juncture, the consumer is bolstered by low unemployment, standing at just 4.3%. New academic research indicates that full employment is consistent with a 4.3% unemployment rate. Inflation is steadily falling towards its 2% target and interest rates are set to fall further. If rates do continue to head lower on mild inflation news, while earnings growth accelerates, then this new bull market should have more years to run.Popular Wall Street wisdom states that the best outcome in Washington is gridlock. Yet the US market has outperformed in years in which one party controls presidency, House, and Senate. And the market does best when the GOP is in control. Interestingly, the US stock market is not looking overly expensive, even at these elevated levels. The current forward P/E ratio for the S&P 500 is 21 times, within the normal range of 15-24x. The ratio of the S&P 500 price to an ounce of gold is now 2.3, within the historical range of 1 to 3.VIXThe VIX Volatility Index tended to trade in the 20 or above range for most of the 2020-22 By Mark Maloney, Managing Director, Gibraltar Asset ManagementContinued p22