Take two: Global markets end strong year; Eurozone factory activity continues to shrink
- 06 January 2025 (3 min read)
What do you need to know?
Global stock markets enjoyed a strong year in 2024, aided by investor optimism over falling inflation and easing monetary policy as well as growth in artificial intelligence and the US election result. The MSCI World net return index rose 18.7% over the year, while the US blue-chip S&P 500 gained 25% and the technology-heavy Nasdaq soared 29.6%1 . Asia equity markets were helped by new stimulus measures in China aimed to boost growth while gains among European indices were more muted. Geopolitical tensions also weighed on global market sentiment during the year. Bond yields rose, while the JP Morgan Global Government Bond Index fell 3.7% - yields move inversely to prices.
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Around the world
Eurozone factory activity continued to shrink in December, according to the bloc's final Purchasing Managers’ Index (PMI). The manufacturing reading slipped to 45.1 from 45.2 in November – it has remained below 50, indicating contraction, for two and a half years, data provider S&P Global said. Elsewhere, the US manufacturing PMI fell to 49.4 from 49.7 in November, with factory production contracting at its fastest pace in 18 months reflecting a decline in new orders. Meanwhile, China's manufacturing sector expanded again, albeit at a slower pace, with a reading of 50.5 in December, down from November’s 51.5.
Figure in focus: 2.3%
AXA IM expects the US economy to post another solid year in 2025, forecasting growth of 2.3%. However, we expect Donald Trump’s new administration to introduce growth-restraining policies soon after inauguration, likely causing expansion to slow markedly across 2026 to 1.5% for the year. Elsewhere, we predict Eurozone GDP to grow by 1.0% in 2025, helped by a pick-up in consumer spending. In China, we expect a managed economic slowdown, supported by stimulus measures to address a weak labour market and falling property prices, and project growth of 4.5% in 2025.
Words of wisdom
Drylands - Arid areas where agriculture is difficult, which now make up almost 41% of land on Earth, excluding Antarctica, according to a recent United Nations study. The report revealed that more than three quarters of the world’s land has suffered drier conditions in the past three decades, creating permanently dry land which is less fertile and less inhabitable for most animal and plant species. Scientists said much of the deterioration can be attributed to human-caused climate change and that by 2100, as many as five billion people – two in every five on the planet – could live in drylands in the worst-case scenario.
What's coming up?
On Monday, services and composite PMIs are published for the US, Eurozone, UK, Japan and China while Germany reports its latest inflation data. The Eurozone releases its December flash inflation rate and November unemployment figures on Tuesday. On Wednesday, a raft of consumer, economic and industrial sentiment surveys are published for the bloc. Wednesday also sees the US Federal Reserve publish the minutes of its latest policy meeting – in December it cut interest rates by 25 basis points to 4.25%-4.50%. On Friday, the US updates on employment data.
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