Philip Petursson, the chief investment strategist at IG Wealth Management, offers insights into what to expect in the financial markets for 2025.
The equity markets may see moderate growth in 2025, according to Philip Petursson, Chief Investment Strategist at IG Wealth Management. Following two years of robust returns largely fueled by valuation growth, Petursson predicts a shift, with earnings taking center stage next year.
IG Wealth Management’s newly released 2025 market outlook highlights the challenges and opportunities ahead. Over the past two years, the market saw gains from valuation expansions, such as rising price-to-earnings (P/E) multiples. Petursson explained that while these gains propelled indices like the TSX and S&P 500, future returns will likely hinge on companies’ earnings.
In an interview with BNN Bloomberg, Petursson expressed optimism about 2025 being a strong earnings year for companies in the S&P/TSX Composite and S&P 500 indices. He expects a slight contraction in valuation multiples but anticipates mid-single-digit returns for equity markets.
“The last two years have been about valuation growth, not earnings,” Petursson said. “Next year, the focus will shift, with quality earnings driving the market.”
The report emphasizes the need for a “selective approach” to investing, encouraging a focus on sectors and regions where valuation aligns with growth. IG Wealth Management suggests that stock-picking based on value and quality earnings could outperform broad index strategies. Petursson stressed the importance of diversification, advising investors to spread their assets across classes, geographies, and styles.
He added that while investor sentiment appears positive, actual investment flows—both in Canada and the U.S.—serve as stronger indicators. “Rising flows show investor confidence, though they don’t guarantee stronger returns,” he noted.
The market outlook encourages disciplined stock selection and attention to earnings quality. With elevated valuations, identifying opportunities with a balance of growth and safety could be key to success in 2025.
