The PULSE: Global Economic and Market Update: December 23, 2024

As the year winds to a close, global markets react to a mix of encouraging economic data, sector-specific developments, and geopolitical tensions. Here is a detailed overview of today's economic and market highlights:

Stock Market Performance

• United States:

U.S. equities are ending the year on a high note. The S&P 500 has surged by 24% year-to-date, primarily driven by robust technological sector gains, particularly from companies like Nvidia and Tesla. Investors are buoyed by hopes that the Federal Reserve's tightening cycle is over, with potential rate cuts on the horizon in mid-2025. Economic resilience, as demonstrated by strong labor market figures and steady corporate earnings, has further boosted investor confidence. (Source: Reuters)

• Europe:

European stocks faced modest declines today, with the STOXX 600 index slipping 0.15%. The market's performance has been mixed due to concerns over slowing growth and persistent inflation in the eurozone. Additionally, the euro fell 5.5% against the dollar this quarter, marking its weakest quarterly performance in two years. Export-heavy companies, however, benefitted from the weaker euro, slightly offsetting market losses. (Source: Reuters)

• Asia:

Japan's Nikkei 225 index in Asia rose 1.2% today, driven by strong manufacturing and export data, reflecting economic resilience. China's stock market, while volatile, has managed a 14.5% gain for the year as the government introduced stimulus measures targeting the property sector and consumer spending. Concerns remain about the long-term impact of these interventions. (Source: Reuters)

Key Economic Indicators

• Inflation:

Inflation trends show signs of easing globally. The IMF projects global inflation to decrease from 6.7% in 2023 to 5.8% in 2024 and 4.3% in 2025. Advanced economies, including the U.S. and the eurozone, are seeing inflation rates nearing central bank targets, creating optimism for rate stabilization. In contrast, emerging markets still grapple with higher inflation due to commodity price volatility. (Source: AP News)

• Global Growth:

The IMF forecasts a global growth rate of 3.2% for the next two years, slightly below pre-pandemic levels. In the U.S., growth is expected to slow from 2.8% in 2024 to 2.2% in 2025. Energy challenges and tighter monetary policy hamper European growth, while ongoing property market struggles and weaker consumer confidence have tempered China's growth outlook. (Source: AP News)

Geopolitical and Sectoral Developments

• Trade Tensions:

The U.S. Department of Commerce has investigated China's semiconductor industry, alleging anti-competitive practices. This could escalate trade tensions and have ripple effects on global technology supply chains. Analysts warn that prolonged disputes could hinder the tech sector's recovery and lead to inflationary pressures. (Source: Financial Times)

• Automotive Industry:

The automotive sector is experiencing a shake-up with talks of a potential $54 billion merger between Honda and Nissan. If successful, this merger would create the world's third-largest automaker, positioning the new entity to better compete in the electric vehicle (EV) market, which Chinese manufacturers increasingly dominate. (Source: Financial Times)

Commodities and Currency Markets

• Oil and Gas:

Brent crude prices remain stable at $78.50 per barrel, supported by ongoing OPEC+ production cuts. The market is closely watching for potential disruptions in the Middle East, which could drive prices higher in the new year.

• Currency Trends:

The U.S. dollar index strengthened today, reflecting investor confidence in the U.S. economy. Emerging market currencies, however, faced pressure due to capital outflows as investors sought the safety of dollar-denominated assets.

Market Outlook

Investor sentiment remains cautiously optimistic heading into 2025. The Federal Reserve and other central banks are expected to pause or potentially cut interest rates in response to slowing inflation and global growth concerns. However, risks remain:

• Geopolitical tensions, particularly between the U.S. and China, could disrupt supply chains and trade flows.

• The global energy market remains vulnerable to geopolitical shocks.

• Potential new U.S. import tariffs under the incoming administration could fuel inflationary pressures.

While markets have shown resilience, analysts recommend diversification and focusing on quality investments to navigate potential uncertainties.

Disclosure

This article is for informational purposes only and should not be construed as investment, legal, or tax advice. The information provided herein is based on publicly available data and sources believed to be reliable as of December 23, 2024. However, no representation or warranty is made regarding its accuracy, completeness, or timeliness. All opinions expressed are subject to change without notice and may differ from those of Duncan Williams Asset Management (DWAM) or its affiliates.

Investing involves risks, including the possible loss of principal. Past performance is not indicative of future results. This material does not constitute an offer, solicitation, or recommendation to purchase or sell securities or financial products. You should consult your financial advisor, tax professional, or legal counsel before making investment decisions.

References to specific securities, indices, or other financial instruments are for illustrative purposes only and are not intended as recommendations to purchase or sell. Economic and market conditions described herein are subject to change and may not necessarily reflect the views of DWAM.

Duncan Williams Asset Management is a registered investment adviser. Registration does not imply a certain level of skill or training.

Sources: Reuters (https://www.reuters.com/markets/global-markets-wrapup-1-2024-12-23 Financial Times (https://www.ft.com/content/95700a1b-7738-4b48-99a9-9df334f7d8fa) AP News https://apnews.com/article/715442446ade21f91548095ed46ba312)

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