Quarter in Review Q4 2024
- Quarter in review
- 09.01.25
Key themes
- Global equities rose to new all-time highs in the fourth quarter of 2024, amid expectations of growth-supportive policies from the incoming US administration. Stocks then fell towards the end of the period as the potential for fewer Federal Reserve (Fed) interest rate cuts in 2025 weighed on sentiment.
- Global activity data continued to indicate divergence, with US data showing economic strength while there were some mixed signals in the Eurozone.
- The main event over the quarter was the US election, which resulted in Donald Trump being re-elected as President and the Republicans winning a ‘clean sweep’.
Markets snapshot
- The MSCI All Country World index rose by 1.4% (6.8% in euro terms), supported by a 2.8% (10.8% in euros) rally in the MSCI USA.
- Small cap equities rose by 0.4% (5.1% in euros) amid expectations that policies like tax cuts and deregulation from the incoming Trump administration would be supportive for US small caps.
- Emerging market (EM) equities declined by 4.2% (-0.7% in euros) as the asset class was weighed down by a potential growth drag from US tariffs, which hurt sentiment towards Chinese stocks – the MSCI China fell by 7.0% (-0.5% in euros) over the quarter.
- Government bond yields rose, with the 10-year US Treasury yield up by 78bps to 4.57%. The ICE BofA 5+ Year Euro Government bond index returned -0.6% as German Bund 10-year yields rose from 2.12% at end-Q3 to 2.35%, pulled higher by US yields and the possibility of looser fiscal policy post the German election in February.
- European investment grade corporate bonds returned 0.8%, with yields down by 3bps to 3.26%. Global high yield bonds returned 0.4%, supported by income that more than compensated for capital losses from increased yields.