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December Market Summary: More growth, less inflation bring stock and bond gains*
10th January 2025
A risk-on mood last year left hefty Equity gains and modest Fixed Income returns, all on the back of: global economic growth holding up better than expected mainly driven by the resilient US economy, falling inflation, and ongoing optimism about Artificial Intelligence (AI)’s ability to propel productivity gains.
The US S&P 500 index posted a 25% gain, boosted by Trump’s victory in the November US election: his promises to cut taxes and deregulate were perceived as growth-positive but inflation-negative.
Global Growth (+26%) outperformed Global Value (+12%), while European bourses lagged (Stoxx Europe 600 +9.6%), dragged down by slow growth and political instability in France and Germany.
Expectations for future rate cuts were scaled back particularly in the US after the election of Donald Trump as President. In the US, the 10-year US Treasury yield ended the year at 4.6% - a jump from the 3.9% at the beginning of the year. As a result, Global Sovereign bonds declined 3.6% but riskier parts of the market fared better with HY and EM hard currency bonds up +8.6% and +5.4%.
*All the above reference indices are expressed in local currency terms.
Source: Bloomberg. Data as of 31.12.2024
Disclaimer
Data as of 30.11.2024. All the above reference indices are expressed in local currency terms.
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