Introduction

December 2024 closed the year on a strong note as investors embraced declining inflation, easing monetary policy signals, and sustained economic resilience. Global equity and bond markets rallied into year-end, buoyed by a dovish shift from major central banks and improved liquidity conditions. Volatility fell, risk appetite surged, and multiple indices ended 2024 near record highs.

United States

U.S. equity markets finished 2024 with their best quarterly performance in over three years. The S&P 500 rose 4.6% in December, closing the year up nearly 21%, while the Nasdaq Composite gained 5.4%. AI-linked tech names and financials led the final-month rally as Treasury yields declined and rate cuts appeared imminent.

The November CPI showed headline inflation at 2.9%, its lowest since early 2021. The Federal Reserve held rates steady but released a dovish dot plot projecting three rate cuts in 2025. Chair Jerome Powell noted that "the disinflationary process is clearly underway." The 10-year Treasury yield fell to 3.89%, its lowest since July.

Europe

European equities rallied in tandem with the U.S. The Euro Stoxx 50 rose 3.7% in December and closed the year up 16%. The European Central Bank maintained rates at 3.75% but hinted strongly at cuts starting in the first half of 2025. Eurozone inflation fell to 2.0% - meeting the ECB's target for the first time since 2021.

Improved consumer sentiment and easing energy prices supported the rebound. German and French bond yields dropped meaningfully, and peripheral spreads narrowed. The euro strengthened slightly on a more optimistic regional growth outlook.

Asia-Pacific

Asia-Pacific markets ended the year on a high note. Japan's Nikkei 225 gained 2.8% in December, reaching its highest level since 1989. The Bank of Japan retained its policy settings and reiterated that any normalisation would be “gradual and well-telegraphed.” The yen strengthened slightly after falling for most of the year.

China's equity markets rose modestly. The Hang Seng Index increased 2.1% and the Shanghai Composite gained 1.4%. Recent data suggested a tentative recovery in retail sales and industrial production. Beijing signaled more targeted fiscal support in 2025. Australia's ASX 200 advanced 3.3% as commodity prices rallied and rate cut expectations returned.

Emerging Markets

Emerging markets extended their Q4 gains. The MSCI Emerging Markets Index rose 4.9% in December, with strength in Latin America, India, and Southeast Asia. Capital inflows accelerated as the dollar weakened and global bond yields fell.

India's Nifty 50 gained 3.8% and closed 2024 up 17%, supported by macro stability and strong domestic demand. Brazil's Bovespa rose 4.4% as the central bank continued its easing cycle. Mexico, Thailand, and Vietnam also posted strong results as foreign investor appetite returned to EM assets.

Commodities

Oil prices rebounded in December. Brent crude climbed back to USD 83/barrel on colder-than-expected winter demand and a pickup in Asian industrial activity. Inventories remained tight, and OPEC+ signaled continued restraint.

Gold finished the year at a record high near USD 2,520/oz, boosted by falling yields, central bank accumulation, and increased demand for inflation hedges. Copper rose 4.2% on supply-side constraints and positive demand expectations heading into 2025.

Fixed Income & Currencies

Global bond markets posted their strongest quarterly performance since the pandemic era. The U.S. 10-year yield dropped more than 80 basis points during Q4, and European yields followed. Credit spreads tightened further, and new issuance surged as funding conditions improved.

The U.S. dollar weakened for a second straight month. The euro, yen, and Swiss franc all appreciated. Emerging market currencies also strengthened, particularly in Latin America. The Singapore dollar ended the year near a 12-month high as MAS policy and external trade data remained supportive.

Outlook

December capped a year of macro recalibration, where inflation steadily declined and central banks signaled the end of their tightening cycles. As 2025 begins, markets are pricing in coordinated rate cuts, sustained economic stability, and potential outperformance in rate-sensitive sectors and regions.

Brightness Capital & Asset Advisory enters 2025 with a constructive outlook on global risk assets, favouring quality equities, duration-sensitive bonds, and select exposures to commodities and EM. We remain vigilant on geopolitical and inflation shocks, but see early 2025 as a window of opportunity for active allocation and tactical risk positioning.