The year 2024 has been a lifeline for the global financial markets. The same witnessed great performances in equities and cryptocurrencies and presented mixed fortunes to regions such as the UK, China, and Europe. Behind these developments, there are some major driving factors. They include falling inflation and resilience in the US economy; however, concerns on inflationary pressures have remained.
Global Stock Markets
World stock markets had a fabulous year in 2024: easing inflation and a US economy, which avoided recession, sent the US, Europe, and the UK to new heights. Among these, the US was among the few developed countries that were in the forefront. Many record highs on S&P 500 kept on coming to send Wall Street to great heights. It was mainly due to the powerful performance of stocks in the tech industry.
The Nasdaq jumped more than 28% after chipmaker Nvidia led the charge. It said that revenues surged as the demand for semiconductors, used in AI systems, surged. Its shares were up over 170% for the year. Other major tech companies that showed strong gains include Alphabet at 35%, Meta at 65%, and Tesla at 62%.
In December 2024, the FTSE 100 in the UK had risen 5.7% and subsequently peaked at the lifetime high for the year at May, although the last of the year remained quite poor. The DAX in Germany even surpassed that performance with 19% return on investment, having its own local issues, whilst the CAC in France moved down by 2.1%.
Bonds and Interest Rates
Government bond yields surprised in 2024 with higher yields as the central banks reduce the rates much slower than predicted. UK 10-year bond yields rose from 3.6% to almost 4.6%, while US Treasury yields increased, too, and this time for persistent concerns of inflation as rate cuts continue at the Fed.
Currency Movements
The pound continued to hover relatively steady against the dollar, closing at about $1.25 following its performance well against the euro as it jumped to €1.20 from €1.15 due to gaining hopes that the European Central Bank was likely to make some more forceful cuts in the interest rates.
Trend in the Crude Oil Market
Oil prices ended the year in the red after Brent Crude fell from an average of $79 per barrel in January to $74 by December. Tensions in geopolitical areas briefly spiked prices, but fears over the weakening global demand for oil, especially from China and India, sent the market into a tailspin.
Cryptocurrency Rally
Bitcoin continued to rally further with a 120% gain during 2024. From $43,000, it jumped up to $71,000 mid-March, and it was later to surpass $100,000 when Donald Trump was elected. Though the cryptocurrency topped out at $108,000, it still ended the year around $93,700, having gained from the growing acceptance from institutions.
Outlook
Markets in 2025 will kick-start the year with a messy combination of opportunity and risk. The structural trend – namely the thrust of growth from technological innovation – remains, but will now be met with sustained inflation, geopolitical shocks, and new forms of monetary policies.
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