2024: THE YEAR IN REVIEW

2024: THE YEAR IN REVIEW

As we bid farewell to 2024, it's time to reflect on a year that brought strong gains across global markets, setting a new tone of optimism for investors. The investment landscape of the past 12 months has been shaped by several key trends, from surging equity markets and improving economic conditions to the continued dominance of technological innovation.

Equity Markets on the Rise

This year saw robust returns in major equity markets, driven by strong corporate earnings, technological advancements, and improving investor sentiment. Here’s a snapshot of market performances over the past year:

  • ASX 200: Australia’s primary index posted a respectable return of 6.97%, demonstrating steady growth amid a moderating economic environment.

  • S&P 500: The U.S. benchmark index surged by an impressive 24.01%, fueled by the continued dominance of the "Magnificent Seven" tech giants and the ongoing AI revolution.

  • Balanced Portfolios (50% equities/50% bonds): Diversified investors enjoyed returns of 8.76%, benefitting from both stable equity markets and a cooling bond market.

  • Growth Portfolios (70% equities/30% bonds): A slightly more aggressive allocation yielded a 11.47% return, highlighting the rewards of taking calculated equity exposure.

  • Sydney Property Prices: Locally, property prices in Sydney rose by 3.1%, showcasing moderate growth in one of Australia’s most desirable markets.

Key Drivers of Growth

  1. AI and the Tech Revolution
    The remarkable rise of artificial intelligence (AI) continued to dominate headlines and drive market performance in 2024. Tech companies such as Nvidia (+170%) and the broader "Magnificent Seven" (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla) enjoyed unparalleled growth, thanks to booming AI demand and related technologies.

  2. Global Economic Resilience
    Concerns over recessions faded as inflation moderated and central banks around the world began to ease interest rate policies. The U.S. Federal Reserve’s shift toward rate cuts provided a significant tailwind for equity markets, bolstering investor confidence.

  3. Political Developments
    The unexpected reelection of Donald Trump in the U.S. led to investor enthusiasm over potential tax cuts and deregulation policies. Globally, markets like Germany’s DAX (+18.9%) and Japan’s Nikkei 225 (+20%) recorded their best performances in years, supported by economic resilience and innovation.

  4. Geopolitical Tensions
    Despite global instability—ranging from ongoing conflicts in Ukraine and the Middle East to strained U.S.-China relations—markets largely shrugged off these risks. Commodities such as gold and coffee set records, while safe-haven investments remained attractive to risk-averse investors.

Australia’s Position

While international markets grabbed much of the limelight, Australia’s investment scene held its own. The ASX 200’s 6.97% return reflects steady progress, though more modest than the outsized gains seen in global markets. Property prices also experienced tempered growth as interest rate hikes began to stabilize.

Lessons for Investors

2024 taught us that long-term strategies, patience, and diversification remain key to navigating both opportunities and challenges in the markets. The year underscored the importance of staying invested during periods of uncertainty, as market momentum can shift rapidly and decisively.

As we step into 2025, investors should prepare for new challenges and opportunities, including potential volatility from geopolitical events and policy changes. By maintaining a balanced, forward-looking strategy, there’s every reason to believe that the coming year will continue to reward disciplined investors.

If you’d like to discuss how you can position your portfolio for 2025, contact Newcastle Advisors today.

Matthew McCabe