Wall Street’s rally has captivated investors worldwide, defying expectations of a global stock market slowdown. The US stocks are set to experience their second consecutive annual gain exceeding 20%, driven largely by the President-elect’s plans for tax cuts and deregulation.
The S&P 500 share index is 24% higher this year, with shares in AI chipmaker Nvidia rising 172% and Elon Musk’s carmaker Tesla gaining 69%. Investors’ exposure to US stocks has reached record levels in December, with the combined value of the “Magnificent Seven” US tech stocks accounting for around a fifth of MSCI’s world share index.
However, European stocks have struggled, with the euro sliding 5.5% against the dollar this year. The euro zone economy is declining more slowly, but some forecasters are tipping Europe for a 2025 rebound. Gold has gained 27% in 2024 as investors seek diversification trades.
Emerging market currencies have been hit hard by US tariff fears and dollar strength, with Egypt’s and Nigeria’s currencies falling around 40% against the dollar. However, some markets, such as South Africa’s rand and Hong Kong’s dollar, have hovered near unchanged for the year.
The Trump trade war has caused anxiety among debt investors, who fear excessive White House borrowing that could roil the $28 trillion Treasury market. The Federal Reserve’s decision to point to fewer rate cuts in 2025 has increased market uncertainty.
Despite these challenges, some markets have performed well this year. Lebanon’s defaulted dollar bonds returned around 100% over the year, while Argentina’s dollar bonds powered a 100% return due to bets on Trump’s White House return.
The US stock market’s high-octane rally continues to propel global markets forward, despite risks and uncertainties.
Source: https://www.reuters.com/markets/global-markets-year-end-graphic-2024-12-23