Market Commentary 4th Quarter 2024
The year 2024 was a positive surprise for investment markets. The avoidance of a recession, despite the previous sharp interest rate hikes and the consistently good economic situation drove especially stock markets to new highs.
Business Activity and Global Economy
The last quarter of 2024 was dominated by the US presidential election in November. In the run-up to the election, uncertainty among investors was high as a close race and no clear winner was expected. With the scenario of a prolonged period of uncertainty and vote recounts looming, investors sought refuge in safe havens such as gold.
In the end, however, Donald Trump won the election by a clear margin and the Republicans also won a majority in both chambers of Congress. The direction for the next few years in the USA is therefore clear: "America first". Thanks to quick clarity about the future govern- ment, continuous interest rate cuts by the US Federal Reserve and solid quarterly figures from major companies, both the US stock market and the US dollar have risen. Neverthe- less, unanswered questions remain about Trump's time in office: Will he introduce the announced tariffs, tax cuts and immigration laws and, if so, to what extent? And what form will cooperation with Europe and the rest of the world take with regards to the numerous geopolitical trouble spots?
The loser of the election in the eyes of investors was Europe - the majority of European stock indices fell after the election winner was announced. Nevertheless, some of the problems are home-made: Demographic ageing, bureaucracy and overregulation are hurdles for European companies, which are also struggling with falling global demand. In addition, there is a lack of clear leadership in both France and Germany. Accordingly, companies have been signaling restraint in the regular surveys on the economic climate for some time now.
Switzerland, which exports a large proportion of its goods and services to Europe, also suffered from Europe's weakness. In addition, the strong Swiss franc continues to be a headwind for export-oriented companies. Accordingly, the Swiss National Bank decided to lower its key interest rates to 0.5% in view of the overall economic situation and the low inflation in Switzerland.
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