Revised data shows UK economy failed to grow in the third quarter of the year.
US economy added 227,000 new jobs, although the unemployment rate edged up slightly.
Emerging market equities gained, led by Asia Pacific while Middle East and emerging Europe also advanced.
In December, European equities fell as losses in healthcare and utilities offset gains in technology, while the ECB signalled a shorter period of restrictive policy. UK markets declined due to disappointing data, rising inflation, and stagnant growth. US equities ended negatively despite Federal Reserve rate cuts, with inflation remaining elevated. Asia Pacific equities slipped due to political turmoil, but emerging markets gained, driven by strong performances in Asia and the Middle East.
European equities fell in December, ending a year with modest returns. Novo-Nordisk's sharp decline due to weaker obesity drug data led the market lower. Healthcare, real estate, communication services, and utilities were weak, while technology and consumer discretionary sectors gained.
The European Central Bank (ECB) cut its deposit rate by 25 basis points (bps), signalling less concern about inflation and a shorter period of restrictive policy. Growth forecasts for 2025 were lowered to 1.1%. Germany faces structural challenges, while Spain shows strong growth potential. The German Ifo Business Climate Index fell, and a snap election was called after the coalition collapsed.
The UK equity market closed lower in December due to disappointing data and the Bank of England (BoE) indicating fewer interest rate cuts next year.
The Office for National Statistics (ONS) reported UK inflation rose to 2.6% in November, driven by higher fuel and clothing prices. The BoE kept interest rates at 4.75%, signalling that stubborn inflation will delay rate cuts. UK economic growth fell by 0.1% in October, with stagnant services and falling production output.
US stocks ended 2024 negatively, with the S&P 500 and Russell 2000 down, while the NASDAQ Composite gained slightly. The Federal Reserve (Fed) reduced interest rates by 25bps to 4.5% in December but signalled fewer cuts in 2025 due to persistent inflation. US consumer price index (CPI) rose to 2.7%, and core CPI remained at 3.3%. The US economy added 227,000 jobs in November, and gross domestic product (GDP) grew by 3.1% in Q3. The Composite Purchasing Managers' Index (PMI) was 54.9.
Asia Pacific equity markets fell in December. South Korea's market was hurt by political turmoil, while Australian equities fell due to concerns over slower US Federal Reserve rate cuts. Taiwan advanced on AI-related stocks, and Chinese stocks rose on expected stimulus measures. Chinese markets gained on anticipated public spending in 2025. Taiwan's central bank raised its growth forecast but kept the benchmark rate at 2%. South Korean markets slipped due to political turmoil.
Indian equities declined, and Japan’s markets rose with a weaker yen. The Australian equity market slipped in response to the US Fed’s recent signals of fewer anticipated rate cuts in 2025.
Emerging market equities gained, led by Asia Pacific, while the Middle East and emerging Europe also advanced. Brazil's equities declined as Banco Central do Brasil raised the Selic rate by 100bps to 12.25%. Türkiye performed well in 2024, cutting its policy rate to 47.5%. The Middle East saw strong performance due to robust earnings and oil price recovery. Poland experienced a modest decline, while Hungary and Czech equities faced economic challenges.
The Fed lowered interest rates by 0.25% in December, totalling a 1.0% cut since September. The ECB also reduced borrowing costs by 0.25% (from 3.25%). US treasuries returned -1.69% in December, German bunds -1.61%, and UK gilts -2.55%. The US economy grew at 3.1% in the third quarter. The Bank of England held rates at 4.75%. Corporate bond markets were mixed, with US investment grade bonds returning -1.78%.
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