Vastly divergent policies from global central banks have sparked investor concern that 2015 is set to be a turbulent year, as the Bank of England (BoE) details the dangers that an interest rate rise poses for the nation's housing market.
"Next year is going to be massively volatile because you've got all the major central banks doing things they don't really know how to do," Peter Sullivan, head of European equities at HSBC, told CNBC Monday.
The U.S. Federal Reserve and the BoE are on course to raise their main interest rates from record lows either next year or at the beginning of 2016. This is in contrast to the euro zone and Japan, where key interest rates are likely to remain low for the next few years.
Interest rates – which are benchmarks for all sorts of mortgages and loans - were cut after the global financial crash of 2008 in the hope of stimulating lending. However, with both the U.K. and U.S. economies seeing better growth and falls in unemployment levels, expectations are high that there will be a change in policy in the near future.
Ratings agency Moody's warned of "disorderly normalization" in its 2015 outlook, adding that rate rises could hit growth and undermine sovereign credit quality.
There could be an immediate shock to asset prices and capital flows, Moody's said, stemming from a drop in confidence in the likely evolution of U.S. rates.
Credit Suisse analysts also expect major shifts in capital flows and asset pricing next year, warning of a volatility "awakening". The bank said it was expecting more market storms in 2015 than of late, and predicted a year-end target of 2,100 points for the S&P 500, which is below its mid-year target of 2,200.
Meanwhile, HSBC's Sullivan urged investors to buy high-yielding stocks to ride out this period of turbulence, adding that investing in telecoms, utilities, and insurance stocks would be the best way to navigate 2015.