26th February 2025
Q4 2024 Highlights
The fourth quarter saw solid economic growth, further rate cuts and buoyant investor confidence.
But political uncertainty saw a surge with Donald Trump's re-election and Labour’s first Budget.
Markets experienced significant dispersion in returns
UK Equities
UK equities fell as concerns rose around the economic impact of the Labour Budget, despite promising wage growth data and rising house prices across the UK.
US Equities
Trump’s re-election initially fuelled a rally across all segments of the US market, notably smaller companies.
However uncertainty also escalated, and expectations of interest rate cuts decreased. This pushed investors into the perceived safety of the large US technology stocks in December.
Japanese Equities
The Japanese Yen weakened towards the end of 2024 bolstering the earnings outlook for large exporters and the Japanese market finished the year strongly.
Emerging Market Equities
Despite further stimulus measures by the Chinese authorities, Emerging Market (EM) equities underperformed as the US dollar strengthened - typically a headwind for EM assets.
Government Bonds
Fixed interest markets weakened as government bond yields rose sharply. This was due to the prospect of higher economic growth and inflation, as well as higher government borrowing, if Trump enacts his pro-growth policies.
Q1 2025 Outlook
Markets will have to absorb a significant amount of political volatility; however, we remain positive on markets and the global cycle in 2025:
- Strong service sector indicates global growth
of c.3%
- Recovery in global manufacturing is likely due to supportive monetary and fiscal policy
- Early signs of sustainable recovery in the Chinese economy
- Germany set to shift to an expansive fiscal policy stance
Investor sentiment remains strong, with ample cash to deploy
