Barclays London Chief Market Strategist: Global Markets Face Repricing in 2025, Diversified Investment Becomes Key Strategy

According to the Zhitong Finance APP, Julian Lafarge, Chief Market Strategist at Barclays in London, stated in a research report that the global market is undergoing a significant turning point in 2025. The U.S. economy actually contracted in the first quarter, developed market indices outperformed U.S. stocks, and the dollar has depreciated by 10% since its peak in January. The bank recommends that investors adopt a selective asset and diversified investment strategy. The bank firmly believes that higher quality asset allocation is the cornerstone of a portfolio, while also seizing opportunities for short-term regional adjustments and yield enhancements.

Barclays' main points are as follows:

Everything has changed. Six months ago, a tougher U.S. trade policy, a weakening dollar, and economic contraction were not the fundamental scenarios. After the first reality check, the market is now uncertain about what expectations to have. Ultimately, the outcome should be quite moderate, opening the door for investors to re-examine diversified investment.

The Opening of 2025

The start of 2025 is truly astonishing. A series of events in the first half of the year once again proves that consensus is often wrong, especially in such a highly unidirectional situation. Six months ago, people were convinced that the U.S. would continue to maintain its superior position, and the upcoming Donald Trump administration would boost economic growth and risk assets (including the dollar). In November 2025, the bank had already warned that a phase of lower returns would be ahead. Fast forward to now, the U.S. economy actually contracted in the first quarter; developed market indices outperformed the U.S. stock market; and the dollar has depreciated by 10% against a basket of other currencies since peaking in January.

Uncertain Outlook

Unfortunately, for investors, the current consensus is even more ambiguous than it was six months ago, making it harder to know the "other side" of the trade impacts. That said, there are some signs of complacency: the impact of U.S. tariffs, blind optimism about the Eurozone's prospects, and the widespread view that the dollar will weaken further. While these views are not extreme, they make the bank aware of where "painful trades" may occur and in which areas reality checks are needed. "Although global investors may reconsider where to allocate funds, they will not give up on U.S. assets."

Staying Steady

In the remaining time of 2025 and next year, global economic growth seems likely to weaken, and inflation will also decrease. Therefore, interest rates should decline further. In this environment, selective assets and diversified investments remain key. As the bank has mentioned multiple times before — and as it pointed out in November — the speed of changes in market narratives often outpaces the speed at which most investors adjust their portfolios. Investors should not chase the latest trends or overreact to recent concerns, but should focus on maintaining steady operations. The U.S. economy will not experience a boom, but it will not completely collapse either. The EU is making progress, but it cannot solve all problems in a few months. Although global investors may reconsider where to allocate funds, they will not give up on U.S. assets. Artificial intelligence will not take over the world tomorrow, but it will not disappear either Diverse Choices

Taking a neutral stance does not imply a lack of conviction. Because, by definition, extreme situations are unlikely to occur—typically, the outcomes of events are acceptable rather than excellent or terrible. This is why the bank still firmly believes that higher-quality assets (which have proven resilient across various macroeconomic environments) should form the cornerstone of any well-constructed portfolio. In addition, there are plenty of short-term opportunities. Whether it's readjusting regional allocations, capitalizing on elevated yields, or improving diversification through uncorrelated strategies, the ambiguity of consensus means investors have many options