Market development – Q4 2024
21.01.2025
The big theme in the market has been the US presidential election on 5 November. The election was expected to be a “dead heat”, but it ended with a comfortable victory to Donald Trump, who also won a majority in both chambers of Congress. This puts the new president in a very strong position to implement his policies in the coming years.
The first reaction were decent increases in the equity markets in anticipation of tax cuts and deregulation. The dollar and cryptocurrencies also benefited from the election of Trump and rose considerably during November.
During the period up to the election, we saw rising interest rates in the US, mainly fuelled by slightly higher than expected inflation, combined with less fear of recession. In Europe, the economy did not seem quite as robust, so interest rate increases were more moderate.
Right after the election, we saw the biggest increases largely among smaller companies as these companies typically benefit from lower taxes and less regulation.
However, this trend was reversed in December, when the smaller companies fell back considerably and once again, we saw that the equity market was driven higher by the very large companies within IT in particular at the end of 2024.
Figure 1: Development of equities and bonds