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Markets Update: Most stock markets succeed in achieving gains for the year, although South Korea and France significantly underperform. High U.S. yields hinder the year-end stock rally. The dollar stays strong and is set for a significant annual rise. Gold jumps 26% in a successful 2024.
Global Markets Roundup: 31 December 2024
FESX1! | Z1! | NI225 | NQ1! | ES1! | EURUSD | USDJPY | GOLD | CL1! | ZC1! | ZS1! HG1!
Global stocks remained steady on Tuesday amidst cautious year-end trading, as investors adjusted to the forthcoming Donald Trump administration by lowering expectations for significant U.S. interest rate cuts in 2025. This has bolstered the dollar's strength against most other currencies. Trading volumes were low due to the upcoming New Year holiday, and the expected Santa rally largely did not materialize, as high Treasury yields pressured high equity valuations and strengthened the dollar. MSCI's global share index was unchanged for the day but is set to close 2024 with a 16% annual increase. This year's rally has been mainly driven by the U.S., with the S&P 500 rising about 24% compared to an 8% gain for MSCI's broad index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) and only 5% for Europe's STOXX 600. However, recent sentiment has been more cautious due to rising U.S. Treasury yields. The yield on the 10-year note reached 4.64% late last week, its highest since May, marking a shift as the U.S. benchmark yield had remained below 4.5% throughout the second half of 2024 until late December.
As part of year-end adjustments, the 10-year yield fell by three basis points on Tuesday, following a seven-basis point drop on Monday, to settle at 4.52%. Similarly, all three major U.S. indexes ended with substantial losses on Monday, largely due to year-end tax positioning, valuation concerns, and uncertainties about 2025. The only significant economic data from Tuesday came from China, indicating that manufacturing activity barely grew in December, although services and construction showed recovery, suggesting that policy stimulus is starting to affect some sectors as the economy prepares for new trade risks. The National Bureau of Statistics purchasing managers' index slowed to 50.1 in December from 50.3 the previous month, barely staying above the 50-mark indicating growth and falling short of a median forecast of 50.3 in a Reuters poll.
Onshore Chinese blue chips 3399300 fell 1.6%, while Hong Kong HSI remained just in positive territory. Throughout 2024, the CSI 300 rose by 14%, marking its first annual gain after an unprecedented three-year decline. The Hang Seng Index increased by 18% following four years of declines. South Korea's KOSPI KOSPI was Asia's worst-performing stock market this year, with a 10% drop due to political instability affecting investor sentiment. Politics also played a role in some underperformance in Europe, with France's main index falling 2.8% in 2024 PX1, as lawmakers continue to negotiate the 2025 budget following an inconclusive election and the collapse of a cabinet under Michel Barnier. In contrast, significant gains by a few Frankfurt-listed companies, such as the software firm SAP SAP, have resulted in the German benchmark rising over 18% for the year, despite a political vacuum ahead of February's election.
In currencies, 2024 has focused on the dollar, which appreciated against all other major developed-market currencies. This was driven by higher U.S. yields and outperforming stock markets, attracting inflows to the U.S. The dollar index DXY, which compares the U.S. currency to six others, fell by 0.16% on Tuesday but remained near the two-year high reached in November. The index is set to increase by 6.5% this year.. EURUSD | USDJPY | GBPUSD | AUDUSD | NZDUSD
In commodities, oil prices were set for a second consecutive year of decline due to demand concerns in major consuming nations. Over the year, Brent crude futures BRN1! fell by 3.4%, and U.S. West Texas Intermediate crude CL1! decreased by 1%. Both saw slight increases on Tuesday. Meanwhile, gold experienced an outstanding year, climbing more than 26%, marking its best annual performance in over ten years, driven by safe-haven demand amid global geopolitical tensions and monetary policy easing. GOLD | CL1! | ZC1! | ZS1! HG1!
In agricultural commodities, the most traded soybean contract on the Chicago Board of Trade (CBOT) ZS1! rose by 0.5% to $9.96-1/2 per bushel. Wheat ZW1! increased by 0.5% to $5.50-3/4 per bushel, and corn ZC1! climbed by 0.6% to $4.54-3/4 per bushel. Throughout the year, the soybean benchmark fell by 23%, wheat decreased by 12%, and corn dropped by 3.5%. All three crops reached their lowest points since 2020 during this year, with soybeans returning to that low in mid-December as favorable rain improved the outlook for a record Brazilian harvest in early 2025. New York cocoa futures on ICE CC1! fell by 0.5% to $11,445 per metric ton. The market, which hit a record high of $12,931 per ton on December 18, is poised for a 173% annual increase after two consecutive years of rising prices. Prices had risen by 61% in 2023. London cocoa futures C1! increased by 0.2% to 9,135 pounds per ton and were set for a 161% annual rise. Arabica coffee futures KC2! dropped 1.6% to $3.1185 per lb on Tuesday, though they were on track for a 67% annual increase. Prices reached a record high of $3.4835 on December 10. Robusta coffee RC2! fell by 1% to $4,871 per ton but was on track for a 71% annual rise. Sugar is expected to show an annual loss, affected by abundant global supplies following surpluses in both the 2022/23 and 2023/24 seasons. Raw sugar SB1! rose by 0.4% to 19.19 cents per lb but was on course for a 7% annual decrease. White sugar SF1! increased by 0.3% to $504.80 per ton and was heading for a 15% annual decrease.
Looking forward refer to the economic calendar below to see the upcoming events scheduled for today and the rest of the week.
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team