Barclays London Chief Market Strategist: The global market faces repricing in 2025 and diversification is a key strategy

The Zhitong Finance App learned that Julian Lafarge, chief market strategist at Barclays in London, UK, said in a research report that the global market is undergoing a major transformation in 2025. The US economy actually contracted in the first quarter. The developed market index performance surpassed US stocks, and the US dollar has depreciated 10% since its peak in January. The bank advises investors to select assets and diversify their investment strategies. The bank firmly believes that higher quality asset allocation is the cornerstone of the investment portfolio, while seizing opportunities for short-term geographical adjustments and yield improvement.

Barclays main points are as follows:

Everything has changed. Six months ago, tougher US trade policies, a weaker dollar, and economic contraction were simply not the basic circumstances. After the first reality test, the market is now uncertain what to expect. Ultimately, the results should be quite moderate, leaving the door open for investors to re-examine diversification.

The opening of 2025

The beginning of 2025 is amazing. A series of events in the first half of the year proved once again that consensus is often wrong, especially in this highly unilateral situation. Six months ago, people were convinced that America would continue to maintain its superior position and that the upcoming Donald Trump administration would drive economic growth and risky assets (including the US dollar). In November 2025, the bank warned that it would enter a phase where returns would be lower in the future. Fast forward to now, and the US economy actually contracted in the first quarter; developed market indices surpassed the US stock market; since hitting a peak in January, the dollar has depreciated 10% against a basket of other currencies.

The future is uncertain

Unfortunately, for investors, today's consensus is more vague than it was six months ago, making it harder to know the “other side” of trade's impact. Having said that, there are some signs of complacency: the impact of the imposition of tariffs on the US, blind optimism about the future of the Eurozone, and the widespread perception that the dollar will weaken further. Although these opinions are not extreme, they made the bank aware of where “painful transactions” are likely to occur, and in what areas a realistic test is needed. “While global investors may reconsider where to invest their money, they won't give up US assets.”

Stay steady

For the rest of 2025 and next year, global economic growth appears to weaken, and so will inflation. As a result, interest rates should drop further. In this environment, select assets and diversification remain key. As the bank mentioned many times before — and as the bank pointed out in November — market narratives tend to change much faster than most investors adjust their portfolios. Instead of chasing the latest trends or overreacting to recent concerns, investors should focus on maintaining sound operations. The US economy will not prosper, but it will not completely collapse. The EU is making progress, but it will not be able to resolve all issues within a few months. Although global investors may reconsider investing their capital, they won't give up on US assets. Artificial intelligence won't take over the world tomorrow, but it won't go away either.

Diverse choices

Taking a middle ground does not mean a lack of faith. Because, by definition, extreme situations are unlikely to occur — usually the outcome will be good, not excellent or very bad. That's why the bank remains convinced that higher quality assets (which have proven to be resilient in various macroeconomic environments) should form the cornerstone of any well-structured investment portfolio. In addition to this, there are plenty of short-term opportunities. Whether it's reorienting geographical allocation, taking advantage of higher yields, or improving diversification through non-correlated strategies, unclear consensus means investors have plenty of options.