Brighter prospects for global growth and tamer inflation should lift Australian shares to record-breaking territory in 2025, but unlike the thunderous rallies of 2024, future gains will come with greater volatility.

Equity strategists predict shares are set to capitalise on easier monetary settings, improved business sentiment and household rate relief. As the bull market heads into its third year, investors will face steeper and more frequent sell-offs as lofty valuations are tested by protectionist tariffs, the strength of the US dollar and the maturing of the artificial intelligence megatrend.