4Q 2024 Market and Economic Overview

The fourth quarter of 2024 was dominated by the US elections. Financial markets had been optimistic about a Republican win in the weeks beforehand, yet were taken by surprise when the Republican Party secured victories across all three constituencies. US markets initially rallied on expectations of deregulation, corporate tax reform, energy sector support, infrastructure investment and increased defence spending. In December that early enthusiasm was tempered by concerns about inflationary pressures from proposed tariffs and stricter immigration policies.

In US equities, the S&P 500 gained 2.4% in the fourth quarter, bringing its annual return to over 25%. Growth stocks led, with the technology and consumer discretionary sectors supported by resilient consumer spending. US small-cap stocks retreated to pre-election levels amid concerns over inflation and growth, but ended the year with a solid annual performance. Eurozone equities declined, weighed down by economic stagnation, political instability in France and Germany, and recession fears. Indian equities were volatile as foreign investors reduced exposure. Japan's market stabilised after a volatile third quarter, with modest gains following the confirmation of Prime Minister Shigeru Ishiba.

Bond markets came under pressure as yields rose on robust economic data, inflation fears after the election, and concerns about fiscal imbalances and rising government debt. The 10-year US Treasury yield, which had been below 4% at the end of September, rose significantly over the quarter. The Bloomberg US Aggregate Bond Index fell 3%. US high-yield bonds held up better, returning 0.2% over the quarter, with the benchmark index yielding 7.3%. Dollar-denominated emerging market bonds declined 1.9%, while euro-denominated investment-grade bonds gained 0.9%.

Crude oil prices were volatile and ended the quarter lower on concerns about global demand and oversupply, with Brent settling near USD 73 per barrel. Natural gas prices declined sharply. Gold remained resilient, supported by its safe-haven appeal. The US dollar strengthened, supported by rising interest rates and the relative strength of the US economy, while the euro and the yen weakened against it and emerging market currencies depreciated amid capital outflows.

Important information: This snapshot summarises MWC Group's market commentary for the period shown and is provided for general information only. It is not investment, tax or legal advice, a personal recommendation, or an offer or solicitation to buy or sell any investment, and it does not take account of your personal circumstances. Views and figures reflect conditions at the date of publication and may since have changed. Past performance is not a reliable indicator of future results. The value of investments and any income from them can fall as well as rise, and you may get back less than you invested. Exchange-rate movements can affect returns. Market data comes from third-party sources believed to be reliable, but its accuracy cannot be guaranteed. Please seek personal advice before making any investment decision. Issued by Manentia Wealth Consulting Group Limited (C80087), licensed by the Malta Financial Services Authority.