Monthly Market News - December 2024 – Market trends

Alexandre Gauthy - Economist

In December, the ‘Magnificent 7’ accounted for a large portion of the US indices’ performance. Only a tiny percentage of stocks outperformed the S&P 500. Our expert, Alexandre Gauthy, analyzes market trends in December 2024.

Equity markets: comeback of technology

Global equities remained virtually unchanged in December. Except for the emerging countries, the stock market performances were slightly negative in the major regions. At the American stock exchange there were significant performance differences to be noted in December. While the technology sector proved, other sectors suffered losses. The same applied to small caps.

Meanwhile, the macroeconomic context remained favorable in the United States. The November employment report was robust while November consumer spending stayed on track.

Bond markets: bond yields on the rise

A few factors may explain the rise in bond yields in December. Firstly, economic figures continued to support the thesis of a solid US economy. Secondly, the latest inflation data were somewhat higher than expected. It is therefore logical that the Fed has revised downwards its projections for rate cuts in 2025 (merely 2 cuts expected by the median of the forecasts of Fed members).

Central banks: a more cautious Fed

As expected, the Fed cut its interest rates by a further 25 basis points in December. But the vote was not unanimous, and the new median projection now only forecasts 50 basis points of additional easing in 2025, compared to 100 basis points in the September projection.

Currencies: dollar on the rise

The dollar appreciated 2% against the euro during the month following cautious comments from the Fed and economic data that remained more favorable in the United States than in the eurozone. Since November 4, the dollar has gained over 5% against the euro.

Commodities: no major price changes

There were no major price changes for most commodities in December. While oil prices rebounded slightly during the month, the price of industrial metals was under pressure due to investors' uncertainty over the extent of China's stimulus program. Finally, the price of gas in Europe rose due to the scheduled halt to Russian gas exports via Ukraine.

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