The smooth transition of power in the United States was a welcome revelation for investment markets around the world, with many keeping a watchful eye on how that may play out. World equities as of the date of writing are currently up 5.10% across the 3-month period, reflecting 22.50% returns for year to date.
European markets have taken a little more of a wobble in the very recent weeks due to the collapse of the German & French governments, who are considered big hitters in the European markets. The impact of these collapses was priced into markets well before both governments met their faith, and somewhat of a measured recovery has lessened the blow for Euro stock enthusiasts.
The US markets currently sit on 28.5% return for the year to date, Japanese markets are currently 18.7% & the UK are at 9.8%, representing a slight contraction in this quarter. More locally, the Irish index is sitting at 14.1% year to date also showing a contraction, and this is likely down to the ongoing strain and speculation on Irish / US political relationships.
When we look at these indexes combined, as part of an investment strategy, the retail investor has enjoyed a successful 2024. The famous 60/40 portfolio is currently sitting at around 19.68% for this year so far. Slightly more adventurous funds, like an all-equities funds are closer to 30.78% growth for year to date.
What has driven growth in Q4?
Growth drivers in quarter 4 sang of the same hymn sheet as quarter 2 & 3, it appears. Trumps re-election to the White House saw markets respond quite impressively, with Mr Musk’s Tesla being a standout winner from the election.
In addition, we’ve seen further rate cuts by the ECB in Europe to coincide with inflation data. In December, the ECB cut rates by 0.25% and flagged that further cuts are coming down the tracks if the data continues to suggest lowering inflation. The US Fed are scheduled to meet also in December, with a 0.25% reduction also expected.
The remarkable resilience of the magnificent 7 have continued to drive growth and is quite an extraordinary phenomenon. Just this week, Citi Bank Senior US Equity strategist, Scott Chonert branded the Mag 7 as a safe place for investors among market uncertainty!
Summary
As has been a common theme throughout 2024, equities have been kind to its loyal investors. Investors will be happy with their winnings, but will they continue to flourish in 2025? Will the official handover of power in the United States, and eventual leadership of Trump continue to benefit the markets? How will the United States & Ireland do business over the coming years? A lot remains to be seen, a lot to consider but nothing a well thought out strategy and plan cannot overcome.
- By Conor Murray of CMCC Financial Solution.
