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Major central banks are preparing to reduce interest rates. However, BlackRock believes this cutting cycle will be as atypical as the previous hiking cycles. The European Central Bank (ECB) is expected to begin easing before the Federal Reserve (Fed), but according to BlackRock, the policy gap between them will be temporary, even though another Fed hike is not out of the question.

Blackrock highlights infrastructure’s key role amid major trends like AI, which boosts capital spending and impacts energy transitions through data centers. They favor AI investments and note supply chain shifts benefiting India and Mexico. They also see strategic value in private infrastructure equity

BlackRock anticipates that the new macroeconomic environment, characterized by increased volatility, will lead to more frequent valuation changes across asset classes. While short-term outcomes may not always be influenced by valuations, they remain significant in the long run.

The twelve-month returns for the MSCI Japan are close to 14% in U.S. dollar terms. BlackRock doesn’t anticipate that the recent slide in the yen to 34-year lows against the dollar will derail this momentum.