The US stock market has led a remarkable global rally in 2024, as investors continue to pour capital into American assets, Reuters reports.
This surge is largely driven by the continued dominance of Wall Street, with the S&P 500 on track for its second consecutive year of gains exceeding 20%. Despite significant global challenges, including geopolitical tensions and economic slowdowns in Europe and China, the US has remained the primary investment destination, with strong economic growth and artificial intelligence driving market optimism.
The rally is particularly noticeable in the technology sector. Stocks of companies like Nvidia and Tesla have surged, with Nvidia’s shares rising 172% in 2024 alone. The influence of these tech giants—often referred to as the “Magnificent Seven”—is so substantial that they now account for approximately 20% of the global stock index, raising concerns about the potential risks if these companies face setbacks.
In contrast, European markets have struggled to keep up with their US counterparts. The gap between US and European stock performances in 2024 is the widest it has been in over two decades. The euro has weakened against the dollar, and European stocks have underperformed significantly. However, there is cautious optimism for a potential rebound in Europe in 2025, especially as the European Central Bank has reduced interest rates, which may help slow the economic decline.
Emerging market currencies, particularly in countries like Egypt, Nigeria, and Brazil, have been severely impacted by the strengthening dollar and fears of a renewed trade war under President-elect Donald Trump’s policies. These markets are struggling with high inflation and political instability, exacerbating the economic challenges they face. Gold, however, has proven to be a safe haven, posting a 27% gain in 2024 as investors sought diversification outside of equities and currencies.
Chinese markets have experienced a volatile year, with sharp fluctuations following policy announcements by Beijing aimed at stimulating its slowing economy. While Chinese stocks managed to post a 14.5% annual gain, the unpredictability of the market remains, and many investors are bracing for continued ups and downs as China’s economic recovery progresses.
For bond investors, 2024 has been a challenging year. Despite falling interest rates in major economies, including the US and the UK, bond markets have faced losses. The failure of central banks to deliver as much monetary easing as expected, combined with persistent inflationary pressures, has left bond markets underperforming. The US 10-year Treasury yield, for example, rose roughly 60 basis points this year, while other countries like Japan and the UK saw similar increases.
Looking ahead to 2025, many analysts are concerned about the potential risks posed by US policies, including President-elect Trump’s plans for trade tariffs and high government borrowing, which could disrupt the global financial system. The bond market remains uncertain, with fears of rising debt levels and the possibility of further market turmoil.
Overall, the US stock market has been a central force in global investment trends in 2024, attracting significant capital and overshadowing other regions. However, as the year draws to a close, the world markets remain highly exposed to US economic policies, and investors will be watching closely to see how these dynamics evolve in the coming year.
