Financial markets ended 2024 with a strong performance despite unfavourable macroeconomic and geopolitical environment. In this article, we will review the key highlights of 2024 covering macro factors, geopolitics, economies, and financial markets.
Global economy growth dynamics
Subsiding fears of recession, global GDP growth remained moderate, with developed economies, predominantly Europe slowing down due to tighter monetary policies, while emerging markets particularly in Asia continued to show resilience. US, the world’s largest economy, remained resilient against high interest rates and inflation – it continued to grow nearly 3% year over year, which provided confidence to the investors. China’s recovery from earlier struggles was uneven, with mixed results from stimulus measures, but India emerged as a bright spot, driving regional growth.
G7 GDP growth rates

Central banks pivot
After aggressive rate hikes, 2024 marked a turning point for central banks like the US Federal Reserve (Fed), UK Bank of England (BoE), and the European Central Bank (ECB) as they cautiously reduced interest rates by year-end, signalling a shift toward monetary easing. Both Fed and ECB delivered three rate cuts while BoE reduced rates twice. This was a response to easing inflation and indications of slowing economic growth.
UK, US, and Eurozone interest rates

Moderating but sticky inflation
After reaching at highest level of the last decade in 2023, inflation started falling back sharply. In the first half of 2024, inflation was on track towards central banks’ 2% target, however, in the second half of 2024, inflation started picking up slightly but the central banks started cutting interest rates in confidence that inflation will fall, however, later it proved sticky, making rate cutting cycle more uncertain and slower paced than previously expected.
UK, US, Eurozone, and Japan inflation rates 2010-2024

Complicated bond yields confused fixed income investors
Although we saw yields dropping in the first half of the year amid hopes of speedy interest rate cuts and easing monetary policy, however, they started rebounding in the second half, particularly the last quarter, as central banks became cautious in their efforts to bring borrowing costs lower. This was mainly driven by surging inflation and uncertain macroeconomic factors and potential tariffs under Trump’s presidency.

Financial markets delivered again
Equity markets booked 2024 as another best performing year in a row in equity markets recent history. The US S&P 500 index provided the best performance within the developed equity markets bracket with 25% upside amid AI, quantum computing, and data centre boom along with strong economic growth outlook. Companies leveraging generative AI saw sharp increases in market capitalization. Nikkei 225 index was the second-best performing index that increased by over 19% mainly driven by corporate reforms and investors’ optimism, followed by DJ Islamic markets index with just under 17% return. Europe’s Euronext 100 surged by roughly 4% while UK FTSE recorded 9.66% upside amid slower economic growth. China’s Shanghai Index increased 12.7% backed by a series of stimulus packages announced by the authorities. Gold won the crown title, surging by 27% while sukuk index proved a laggard with only 3.4% upside amid highly volatile yield curve. Lastly, GBP lost 1.7% against USD in 2024 while crude oil remained flat.
Performance of global assets in 2024

Another spectacular year for Big 7 – AI driven boom?
The ‘Magnificent 7’ again drove most of the US equity market performance driven by enthusiasm over artificial intelligence (AI) and data centres that helped big technology stocks, (Apple, Amazon, Alphabet Inc., Meta Platforms, Microsoft, NVIDIA and Tesla) gain over 20%. Nvidia briefly surpassed Microsoft to become the most valuable company in the world by market capitalisation. Over the second half of 2024, the largest company crown changes hands several times between Nvidia, Microsoft, and Apple, all of which have market caps over $3 trillion.
Big 7 vs S&P 500 vs Nasdaq – 2024 performance

Few names in the Magnificent 7 drove most of the performance
Breaking down Big 7 further, not all 7 companies performed the same. Nvidia delivered over 170% returns while both Meta and Tesla generated over 60%. The magnificent trio (Alphabet, Microsoft and NVIDIA) delivered over 49% while magnificent 7 collectively returned 31%. Excluding these big seven companies, S&P 500 index increased only just over 7%.
Breaking down Big 7 vs S&P 500 performance

US equity markets concentration risk at its highest level
As Magnificent 7 continued to do well in 2024, their share in the S&P 500 index increased to the highest level, rising from 19.2% in 2019 to 34.6% as at June 2024. This has raised concentration risk for the US equity market, thus making investors more concerned as any negative news from BigTech can be nightmare for the US equities broader index.
Rising US Government debt levels
The US debt level reached highest level in 2024 to roughly $35.5 trillion as of 30 September 2024. The US debt is growing faster than its income, which is a concern for many experts. The continued expansion in debt is likely to result in increased borrowing costs as greater issuance of government bonds lead to higher yields particularly over the medium to long term. This would increase government’s interest expenses, thus further exacerbating the problem. Moreover, persistent fiscal deficits and high debt levels could limit the government’s ability to respond during economic downturns.
China’s economic troubles and restructuring initiatives
China implemented targeted monetary and fiscal stimulus measures to address its struggling real estate sector, persistent deflationary pressures, and declining exports. The government focused on boosting domestic consumption, stabilizing financial markets, and encouraging foreign investment.
India’s economic rise
India outperformed most major economies with a GDP growth exceeding 6%. Key contributors included digital infrastructure development, manufacturing expansion through PLI schemes (Production-Linked Incentives), and a surge in foreign direct investments. However, inflation remained a significant concern, with its impact on consumption and urban demand highlighted as a critical challenge.
BRICS expansion
BRICS (Brazil, Russia, India, China, and South Africa) expanded its influence by adding new member nations, including Egypt, Ethiopia, Iran and the United Arab Emirates. Saudi Arabia and Argentina were both invited to join as well, Saudi Arabia has yet to formally accept while Argentina later declined the invitation. The group pushed for greater use of local currencies in trade, challenging the dominance of the U.S. dollar.
Historic elections
The year was marked by historic elections and global unrest. People in more than 60 countries – representing almost 50 percent of the world’s population went to the polls in 2024. Voters in Mexico and the United Kingdom picked new leaders, while a former U.S. president was elected to a second term in the White House.
• A new British PM: Keir Starmer, leader of the Labour Party, became prime minister of the United Kingdom, replacing Rishi Sunak of the Conservative Party.
• A historic U.S. election: Donald Trump wins the U.S. presidential election, defeating Kamala Harris. He is the first convicted felon to be elected to the office and the second president to win a second non-consecutive term.
Global unrest
Military conflicts continued as the Russia-Ukraine war entered its third year and the fighting surrounding the Israel-Hamas war spread. Here are key highlights of geopolitical events in 2024:
• Genocide of Palestinians by Israeli regime continues: Israeli forces move into the city of Rafah, where more than half of the population of the Gaza Strip was sheltering from the Israel-Hamas war, in apparent defiance of pressure from the United States to limit civilian casualties. Iran strikes Israel with hundreds of drones and missiles during the Israel-Hamas war – it marks the first time the two regional powers have come into a direct military confrontation. U.S. President Joe Biden announced a ceasefire deal meant to end hostilities between Hezbollah and Israel. So far, Israeli genocide and ethnic cleansing of Palestinians particularly in Gaza has resulted in over 50,000 killed and over 90% of the population displaced and infrastructure destroyed.
• Iran’s president died: Iranian hard-line president Ebrahim Raisi dies suddenly in a helicopter crash. Masoud Pezeshkian, the most reform-oriented president in decades, is elected to replace him in July.
• UK anti-immigration riots: In July-August 2024, an estimated 29 anti-immigration demonstrations and riots took place across the UK driven by a fake news. Many of these were violent, with participants attacking mosques and hotels housing asylum seekers and clashing with the police.
• Turmoil in Bangladesh: Sheikh Hasina Wazed, Bangladesh’s five-term prime minister, flees the country amid mass protests against her government. Several days later Muhammad Yunus, a Nobel laureate, becomes the country’s interim leader.
• Assad’s rule ends: After 13 years of civil war in Syria, Bashar al-Assad is ousted as the country’s leader. His attempt to repress the uprising against his rule included brutal tactics, most infamously the use of chemical weapons.
• U.S.-China tech war: The technological rivalry between the U.S. and China intensified, with both nations implementing stricter export controls on critical technologies like semiconductors. This further polarized global supply chains and forced companies to “de-risk” their operations.
2024 has been an eventful year with financial market delivering a great performance and elections across the globe, but the most notable highlight for the year is the continuation of Israeli genocide and ethnic cleansing of Palestinians particularly in Gaza with over 50,000 killed and over 90% of the population displaced and infrastructure destroyed.
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