December 2024
Significant shifts in global geopolitics marked December. The collapse of Syrian President Bashar al-Assad’s regime reshaped power dynamics in the Middle East, heightening tensions among regional and international powers. In South Korea, political instability deepened as martial law was declared, followed by the impeachment of both the president and acting president. The Middle East witnessed intensified conflicts, particularly between Israel and Hezbollah, while in the US, President-elect Donald Trump stirred controversy with his pronouncements and appointments. Vietnam’s defence expo in Asia underscored the region’s growing geopolitical significance as it balanced relations with major global powers.
Major central banks adjusted their monetary policies to address evolving economic conditions. The US Federal Reserve reduced its benchmark interest rate by 25 basis points to 4.25–4.50%, marking its third cut of the year, amid concerns over inflation and growth. Similarly, the European Central Bank lowered its key rates by 25 basis points to 3.00%, continuing its easing cycle to support the eurozone economy. Conversely, the Bank of England held its main interest rate steady at 4.75%, reflecting a divide among policymakers on the necessity of rate cuts to address slowing economic growth.
Global equity markets reflected a mix of optimism and caution. US equities were buoyed by strong economic data, advancements in artificial intelligence, and resilient consumer spending, though the S&P 500 fell by 2.5% as the anticipated Santa Claus rally failed to materialise. The Nasdaq managed a modest gain of 0.5%, helped by strong performances from Tesla (+17.0%), Alphabet (+6.1%), and Amazon (+5.5%). In Europe, markets faced headwinds from persistent inflation concerns and weaker-than-expected industrial output, yet the DAX rose 1.4%, and the CAC 40 gained 2.0%. The FTSE 100 underperformed, falling 1.4%, weighed down by political uncertainties. Asian markets closed the year strongly, with the Nikkei 225 up 4.4% and the Shanghai Composite Index gaining 0.8%.
The USD remained strong, reflecting investor confidence in the US economy and a cautious sentiment toward Europe’s macroeconomic outlook. The USD appreciated slightly against the euro due to weaker-than-expected eurozone industrial output and the ECB’s rate cuts. Against the pound, the dollar gained, as the Bank of England’s steady rate policy and UK political uncertainties weighed on the sterling.
Commodity markets were broadly positive, with the Bloomberg Commodity Index closing the month up 1.0%. Crude oil prices rose on geopolitical concerns and production challenges, with Brent crude up 4.2% and WTI gaining 5.5%. Cocoa prices surged past $12,000 per metric ton due to adverse weather conditions in West Africa, while gold and silver struggled amid a strengthening U.S. dollar and rising Treasury yields.
Cryptocurrency markets saw notable developments, with Bitcoin crossing the $100,000 milestone earlier in the month, driven by optimism over President-elect Trump’s pro-crypto policies. However, Bitcoin ended December at $93,578, a monthly decline of 3.5%, though it posted an annual gain of 111.0%. Ethereum also had a strong year, rising 41.5%.
In summary, December 2024 highlighted the interplay between geopolitical shifts, central bank policies, and market dynamics, closing a year of significant economic and political change.