2024 experienced major financial upheavals, highlighted by soaring stock markets, political shifts, and significant increases in cryptocurrencies and commodities. Key indices reached record highs, driven by tech stocks and political optimism following Trump’s election. Bitcoin surpassed $100,000, while gold prices rose amid geopolitical tensions. Central banks shifted to interest rate cuts, though concerns over recession loomed. A stark performance gap emerged between U.S. and European markets, influenced by contrasting economic conditions.
Turbulent Financial Year: A 2024 Overview
The year 2024 was marked by significant upheavals in the financial world, characterized by political shocks, record-breaking stock markets, and surges in cryptocurrencies and gold prices. Let’s delve into the key events that shaped this tumultuous year in five crucial points.
Record-Breaking Stock Markets
Throughout 2024, major indices such as the Dow Jones, S&P 500, and Nasdaq reached unprecedented heights on Wall Street, each surpassing the remarkable thresholds of 45,000, 6,000, and 20,000 points respectively. Christopher Dembik, an investment strategy advisor at Pictet AM, remarked on the exceptional performance largely driven by technology stocks that thrived on advancements in artificial intelligence.
One particularly noteworthy development was the surge in Nvidia’s share price, which skyrocketed by over 170%. In Europe, while records were also achieved, the increases were less dramatic. The Dax index in Frankfurt, propelled by significant gains from SAP (+70%) and Siemens Energy (+319%), managed to exceed 20,000 points as well.
Political Influences on the Market
The political landscape played a pivotal role in shaping market dynamics in 2024. Donald Trump’s electoral victory invigorated American indices, as investors were buoyed by the Republican’s promises of deregulation and tax cuts. Pierre Bismuth, CEO of Myria AM, noted that this sentiment fostered expectations of sustained growth.
Elon Musk’s Tesla shares, which are closely associated with Trump’s policies, nearly tripled since their lowest point in April. Conversely, in France, the dissolution of the National Assembly negatively impacted the CAC 40, which had initially enjoyed a 6% growth before June but ultimately saw a decline of 2.15%.
Investor skepticism was evident as the disparity between French and German ten-year interest rates widened to around 0.80 percentage points by the end of December, compared to 0.50 points at the start of the year. As we look ahead to 2025, investors are expected to closely monitor the effects of Trump’s tariff policy and the early elections in Germany scheduled for February.
Cryptocurrency and Commodity Peaks
This year also witnessed remarkable gains in cryptocurrencies, with Bitcoin soaring past $100,000 and experiencing an impressive increase of nearly 120%. Ethereum, the second most prominent cryptocurrency, saw a growth of nearly 50% throughout the year. Additionally, gold prices reached new heights due to escalating geopolitical tensions that solidified its status as a safe haven asset.
Moreover, commodities such as coffee and cocoa reached record levels, largely driven by adverse weather conditions affecting supply.
Monetary Policy Shifts
In 2024, major central banks commenced cycles of interest rate cuts after previously raising them to combat inflation. The Swiss National Bank led the way in March, followed by the European Central Bank (ECB) in June, the Bank of England in August, and the U.S. Federal Reserve (Fed) in September. Investors grappled with finding the right pace for adjustments—striking a balance between avoiding inflationary pressures and adequately supporting economic activity.
Weak employment figures released on August 5 raised concerns about a potential recession, resulting in a significant downturn on Wall Street, dubbed “Black Monday,” with declines exceeding 3%. For 2025, market analysts like Alexandre Baradez from IG France highlighted the resilience of the American economy amid persistent inflation. The Fed’s cautionary stance mentioned in its December 18 meeting led to a 2 to 3% drop in Wall Street indices the following day.
In the eurozone, where growth remains stagnant, there is growing optimism regarding the likelihood of upcoming rate cuts.
Disparity Between US and European Markets
The year 2024 also showcased a widening gap between American and European stock performances, with an unprecedented 25% performance difference. Catherine Garrigues, a manager at Allianz GI, attributed this to the robust growth and productivity gains seen in the U.S. economy, contrasting sharply with the sluggish performance of the eurozone and the unfavorable economic conditions in China, a key trading partner.
Looking ahead to 2025, there is cautious optimism surrounding recent stimulus measures announced in China, which may provide much-needed support for European markets, according to Alexandre Baradez.