BlackRock Investment Institute goes further ‘overweight’ on U.S. equities

(Reuters) – The BlackRock (NYSE:BLK) Investment Institute (BII) said on Wednesday that it had gone further “overweight” on U.S. equities as greater adoption of AI unlocks buying opportunities across sectors, even with U.S. stocks trading at record highs.

The BII, a research and analysis arm of the world’s largest asset manager, said in its outlook note for 2025 that it sees persistent U.S. inflationary pressures from rising geopolitical fragmentation, big spending on AI and low-carbon transition.

BII maintained its “overweight” rating on Japanese stocks, pointing to tailwind from corporate reforms, the return of mild inflation as well as corporate pricing power. In emerging markets, it liked India and Saudi Arabia.

In debt market, BII raised its weighting on short-term U.S. Treasuries to “neutral” from “underweight”, saying market pricing now roughly match its expectations for interest rate cuts from the Federal Reserve next year.

“We think it will cut further in 2025, and growth will cool a little, but with inflation still above target the Fed won’t have room to cut much past 4%, leaving rates well above pre-pandemic levels,” BII said in its outlook.