Global Equity Markets 2024 Review: Europe, US, and Asia

In 2024, global markets told a story of contrasts: Europe stumbled under economic strain, the US soared on AI-driven momentum, and Asia found hope in policy shifts.

Europe 2024 Equities Review

European economic momentum faltered sharply last year, with the manufacturing sector bearing the brunt of high energy costs, weak export demand, sprawling and costly regulation.

Compounding these challenges was increased competition from Chinese firms benefiting from state subsidies in numerous areas, particularly in the automotive industry. The divergence between the old continent and the rest of the word widened further amid political crisis in the two largest economies in the eurozone, France and Germany.

The ascent of populist parties eroded political consensus and fueled growing concerns about rising taxation, already among the highest in the world in France. Limited exposure to artificial intelligence and real interest rates remaining well above inflation - despite the ECB's four rate cuts - also weighed on European equities, leaving the eurozone trailing behind global peers.

As a result, the MSCI EMU index posted a modest 6.86% gain, underscoring the extent of the underperformance. However, disparities between national indices were pronounced, with the French CAC 40 down 2.15% and the German DAX up 18.85%.

Moreover, intra-sector performance gaps were extremely high. For example, the luxury sector, which represents a significant portion of the CAC 40, saw Hermès International gain over 20% (including dividends), while Kering collapsed by more than 35%.

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United States 2024 Equities Review

By contrast, US equities delivered another strong performance in 2024, with the S&P 500 posting total returns of 23.31% and the Nasdaq composite jumping 28.64%, bolstered by the continued rise of mega-cap stocks and eyebrow-raising valuations in the world of artificial intelligence (AI). The so-called "Magnificent Seven" maintained their dominance, generating outsized gains. They now account for one-third of the S&P 500's market capitalization and more than four-fifths of the benchmark index's 2024 performance.

Even though inflation remained a bit higher than expected, the US economy demonstrated its strength in 2024, supported in particular by the IRA Act. This momentum is expected to continue into 2025, driven by anticipated deregulation and tax cuts following Trump's victory in the presidential election. It is worth noting that the Fed officials now expect to cut rates by just a half point in 2025.

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Asia Equities 2024 Review

Chinese economic activity remained subdued in 2024 as the country contended with depressed property prices and fragile consumer confidence. However, more coordinated policy measures announced in September somewhat reassured markets, sparking expectations that 2025 might bring the stimulus needed to achieve the minimum acceptable GDP growth rate in response to US tariffs. This helped propel the Shanghai Composite index to a 12.67% gain for 2024 while the Hang Seng surged 17.67%.

Meanwhile, optimism surrounding the end of deflation in Japan, alongside a weak yen and corporate reforms, buoyed the Nikkei 225, which returned 19.22%, making the land of the rising sun the second-best performing major equity market of the year. In India, the Nifty 50 index performed more sluggishly, posting an annual gain of 8.80%.

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Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.