Despite political turmoil, stock markets and Bitcoin set records in 2024, driven by investor enthusiasm for artificial intelligence (AI), lower interest rates and hopes of tax cuts.
The four most noteworthy aspects of financial markets in 2024 are:
Stock records fall like dominoes
Wall Street’s three major stock indexes hit record highs and set new highs in 2024, with the Dow Jones Industrial Average exceeding 45,000 points, the S&P 500 index exceeding 6,000 points, and the Nasdaq Composite. The index exceeded 20,000 points.
“This has been an exceptional year, with tech stocks performing well thanks to artificial intelligence,” said Christopher Dembick, senior investment advisor at Pictet Asset Management.
The Dow ended the year up about 13%, while the tech-heavy S&P 500 and Nasdaq rose more than 23% and about 29% for the year, respectively.
Shares of Nvidia, which makes processors that are particularly good at running AI models, including applications like ChatGPT, rose more than 170% in 2024.
“It’s been about two years since ChatGPT was announced, and two years since the AI buzz was driving some of the big tech companies in the U.S.,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. said.
“NVIDIA, which has become a symbol of the AI rally, is up almost 1,000% since then, and the Magnificent Seven is up almost 100% since last November,” she added.
The Magnificent Seven are seven companies widely known for their influence on technology and consumers. Alphabet (Google), Amazon, Apple, Meta (Facebook), Microsoft, Nvidia, and Tesla.
Records also decreased in Europe, but the increase was less pronounced.
Frankfurt’s DAX, led by business software developer SAP (+70%), topped the 20,000-point level and ended the year with an 18.9% gain.
Tokyo’s Nikkei Stock Average rose nearly 20% in 2024, finally surpassing its high before Japan’s asset bubble burst in the 1990s.
a very political year
Donald Trump’s victory in the U.S. presidential election has further strengthened Wall Street’s hopes that he will follow through on his promises of deregulation and tax cuts.
“The market thought that meant more growth and longer term,” said Pierre Bismuth, director at Milia Asset Management.
But political developments haven’t always helped investors. Let’s look at France. President Emmanuel Macron’s call for early parliamentary elections backfired, with no clear winner and the Paris CAC40 index, which had risen more than 6% before the election, ending 2024 down more than 2%. It ended.
China’s economic downturn further depressed luxury goods stocks.
In 2025, investors are focused on whether President Donald Trump follows through with his threatened tariff hikes, as well as the outcome of Germany’s early elections in February.
bitcoin, gold, goods
Bitcoin has surged more than 120%, topping the $100,000 level on hopes of deregulation under Trump. Although Ethereum failed to break its all-time high, it rose more than 40%.
Gold, which has benefited from its appeal as a safe haven in times of geopolitical tension, also set a new record.
Products such as coffee and cocoa set new records as bad weather caused supply concerns.
Monetary policy roller coaster
Central banks in the United States and some European countries have finally begun lowering interest rates, which they had been raising to stem a post-pandemic recovery and a surge in inflation caused by Russia’s invasion of Ukraine.
Switzerland took action in March, followed by the European Central Bank in June, and the Bank of England and the US Federal Reserve in September.
Not only central banks but also investors were worried about the pace of interest rate cuts. It’s not so fast that inflation flares up again, but it’s also not so slow that economic activity declines.
Trading was volatile at times as investors interpreted economic data in terms of its impact on the probability of a Fed rate cut.
In August, investors were spooked by disappointing U.S. jobs data and worried the economy was on the brink of recession, causing a nearly 3% drop on Wall Street.
But the U.S. economy has proven resilient, and investors and the Fed are tempering expectations for further rate cuts, especially as Trump’s tariffs could trigger new inflationary pressures.
The ECB is expected to continue lowering interest rates in light of sluggish growth in the euro area.
issued – January 1, 2025 3:38pm IST
