Environment

Investors entered 2024 hoping for a soft landing for the economy. The most likely scenarios predicted a slowdown in inflation, an interest rate cut by the developed countries’ central banks as early as March and a possible recession. Not only was a recession avoided, but economic growth turned out to be stronger than expected.

In 2024, global growth was robust, driven by the expansion of several major economies, particularly the United States. According to OECD estimates, global GDP growth should be around 3.2%, supported by lower inflation and more accommodative monetary policies. Inflation continued to decelerate, although pressures remained, particularly in the services sector. Household consumption benefited from rising real wages, although purchasing power remained below pre-pandemic levels in many countries. Global trade also rebounded faster than expected.

The first half of the year was characterised by positive economic data and the beginning of a new cycle of interest rate cuts, initiated by the SNB, followed by the Fed and then the ECB, in response to lower-than-expected inflation. This period was also marked by the strong performance of technology stocks, particularly those companies considered most likely to benefit from the rise of artificial intelligence. On the political front, the holding of early elections in France introduced some uncertainty for the market, though they did not affect the performance of the indices.

Stronger-than-expected growth in the United States supported markets in the second half of the year, in contrast to weak industrial activity in Europe. In China, still adjusting to the aftermath of its property bubble burst, growth fell short of expectations despite measures taken by the Chinese authorities. The election of Donald Trump as President of the United States was a key event at the end of the year, contributing to the rise in financial markets. In Switzerland, growth continues its gradual recovery despite low inflation, which is now giving rise to deflationary risks.

Financial market developments

Equity markets outperformed, buoyed by technology stocks, particularly those linked to artificial intelligence. The performance of large-cap technology companies varied, but flagship stocks such as Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla Motors continued to shine. This enthusiasm was reflected in solid performances by the world's major indices, with the US notably outperforming other regions, confirming a general revival of confidence in the stock markets.

After two difficult years, the bond market benefited from changes in monetary policy. Despite a tense start to the year, particularly for 10-year US Treasuries, which reached 4.7% in April, the situation stabilised in the second half of the year. As a result, US sovereign bonds recorded positive growth in local currency terms. High-yield bonds, in particular, performed impressively, outpacing investment-grade corporate bonds, which also ended the year in positive territory.

The real estate sector showed signs of stabilisation in 2024, supported by the prospect of a reduction in financing costs, although these remain well above the levels seen in 2022. Regional disparities were significant. In Switzerland, listed real estate funds and real estate equities rebounded sharply in 2024. For non-listed real estate, Europe finally saw a positive quarterly result again in the second quarter of 2024, the first since the third quarter of 2022. Asia is also showing the first signs of stabilisation, while performance in the US has been more mixed.

On the foreign exchange market, the Swiss franc lost ground against the US dollar after the SNB announced successive interest rate cuts in March, June and September. The Swiss franc fell by more than 5% against the dollar. The euro was affected by fragile economic fundamentals, including weak growth, low inflation, political issues in France and Germany, and the prospect of a significant increase in US tariffs on European goods.

Gold had an exceptional year, driven by increased demand from central banks, particularly in emerging markets, and growing interest from private investors. These factors propelled the precious metal to record levels, further reinforcing its role as a safe-haven asset.