As 2024 draws to a close, it’s worth reflecting on a year that has been as challenging as it has been rewarding for investors. Global markets delivered good returns, with equities climbing nearly 28% so far for euro-based investors, despite bouts of volatility driven by shifting interest rate expectations and geopolitical uncertainties.
Central banks began easing monetary policy after years of tightening. Inflation, while moderating very significantly, remains in focus.
The year was marked by significant technological advancements, with AI continuing to reshape industries and drive market valuations, albeit accompanied by growing scrutiny over its scalability and ethical implications. Geopolitics remained a dominant theme, from the intensification of conflict in the Middle East to the US presidential election, which reshaped the political landscape and introduced new variables for the global economy going forward.
Closer to home Ireland had a great Olympics, the economy proved resilient, and the electorate voted for stability and a continuation of government led by Fianna Fáil and Fine Gael. This relatively stable political environment stands in contrast to France and Germany, where political uncertainty comes at a bad time for the Eurozone, with Trump inward bound to the White House.
For investors, the key takeaway from 2024 is the value of patience, discipline, and staying committed to a long-term investment plan. Market resilience underscored the importance of navigating volatility with a steady hand, while remaining adaptable to evolving conditions. As we prepare for 2025, opportunities abound, but so do risks. Maintaining flexibility, leveraging expert advice, and focusing on building resilient investment plans will be important to achieving success in the years ahead.
November and YTD Market Numbers
Strong Equity Returns
World equities, as measured by the MSCI ACWI index, surged post the US election resulting in return so far this year for a Euro investor of circa 28%. That includes a 5% benefit from the strengthening US dollar.
Source: MSCI, ACWI Euro investor. Index rebased to 100 as at 31.12.23 Performance from 31.12.23 to 6.12.24
Bonds Also Provide a Return
Bonds also performed strongly in November, bringing returns for the year to close to 3% for global bonds for a Euro investor.
Source: Tradingview
Inflation
In November, Euro area inflation popped back up above the ECB’s long-term 2.0% target.
Source: Trading Economics
ECB Financial Stability Review Report
The ECB Financial Stability Review was published in November. It aims to enhance awareness of systemic risks among policymakers, the financial sector, and the public, with the overarching goal of promoting financial stability.
The report highlights several key risks facing the euro area, including rising geopolitical tensions, policy uncertainty, and global trade disruptions, which have increased the likelihood of adverse financial events.
While financial markets have demonstrated resilience to recent bouts of volatility, significant vulnerabilities persist, such as stretched valuations and concentrated risks, which heighten the potential for instability.
Sovereign debt challenges are deepening due to structural economic weaknesses, heightened fiscal pressures, and weak growth prospects, raising concerns about debt sustainability in some euro area countries. Credit risks are also emerging, with households and businesses—particularly in the commercial real estate sector and other vulnerable areas—facing pressures that could intensify if economic growth continues to falter.
The report calls for fiscal reforms, stronger financial resilience, and progress in the EU Capital Markets Union to mitigate risks in sovereign debt, credit markets, and non-bank intermediaries. It emphasises structural reforms to address productivity, climate, and demographic challenges, all while fostering stability and sustainable growth for investors.
Our Investment Outlook
Equity returns have been stronger than expected so far this year. As a result, for investors considering additional equity allocations, we are currently advocating patience.
Holding cash remains a comfortable position, with returns still approaching 3% annually. This strategy allows us to remain flexible while watching for favourable entry points in the market.
Recent fluctuations highlight the importance of having a well-structured plan and staying committed to long-term objectives. We continue to believe that patience, discipline, and a measured approach are essential components of successful investing. By collaborating closely with your advisor and maintaining a solid plan, you can navigate these market shifts with confidence and be well-positioned to capitalise on emerging opportunities.
Christmas Greetings and Best Wishes for 2025
As this is the final Markets in 1 Minute for this year, may I take this opportunity to wish you and your family a very happy Christmas and best wishes for 2025.
