Market Fortitude: 2024 Financial Year Recap

Table of contents

 

Quick Take

The 2024 financial year was marked by economic resilience, geopolitical tensions, shifts in central bank policies, and a significant rise in equity markets.

Markets faced turbulence from August to October due to the Fed’s hawkish stance, economic troubles in China, rising oil prices, and conflict in Israel.

From November to March, markets rallied as the Fed signalled the end of rate hikes and hinted at potential cuts in 2024, alongside declining inflation.

A highlight of the year was the Nikkei 225 in Japan reaching a record high in February for the first time in 35 years, followed by the Bank of Japan (BOJ) ending negative interest rates in March.

Despite the challenges and uncertainties, we remain cautiously optimistic for the year ahead as the path towards lower interest rates comes into view. 

 



Snapshot

The 2024 financial year showcased a blend of economic resilience, geopolitical tensions, shifts in central bank policies, and a significant rise in equity markets. Among global indices, the S&P 500 in the US stood out with a ~25% increase, while the Shanghai Stock Exchange Composite lagged, ending the year ~7% lower.

Global Equity Indices Performance - FY2024 Graph

The year began on a strong note in July but faced turbulence during August, September, and October. This period saw markets decline due to several factors. The US Federal Reserve's (Fed) hawkish stance at the Jackson Hole symposium and economic troubles in China set a negative tone in August. September and October witnessed rising oil prices, driven by production cuts from Saudi Arabia and Russia, alongside the onset of the conflict in Israel.

However, a market rally commenced in November and continued through March, buoyed by growing investor confidence that the Fed was nearing the end of its interest rate hikes. This was confirmed in December when the Fed hinted at no further rate hikes and potential cuts in 2024. This phase was marked by declining inflation, a halt in rate hikes, and expectations of a soft economic landing in the US.

US Inflation & Cash Rate Target - Last 5 Years

A significant highlight during this period was the Nikkei 225 in Japan surpassing its 1989 record high in February. This was followed by the Bank of Japan's (BOJ) major policy shift in March, ending eight years of negative interest rates and most of its unconventional monetary policy measures. The BOJ's move to raise rates from -0.10% to a range of 0.00-0.10% marked an end to the global era of negative interest rates that began in the 2010s.

Japan Nikkei 225 Index - Lasy 40 Years

In April, markets paused as higher-than-expected inflation readings in the US and ongoing geopolitical conflicts in Israel dampened investor enthusiasm. Nevertheless, the volatility was short-lived.

By May, markets had recovered their losses, spurred by dovish comments from Fed Chair Jerome Powell's indication that interest rates would likely remain steady at 5.25-5.50%, rather than increase further reinforced positivity. Additionally, the US experienced two consecutive months of softer-than-expected inflation in April and May for the first time in four months.

At the time of writing, interest rate markets anticipate the first 0.25% rate cut by the Fed on 18 September, ahead of what is sure to be an entertaining US Presidential Election on 5 November.

Despite the challenges and uncertainties, we remain cautiously optimistic for the year ahead, considering the progress achieved. While inflation remains above central bank targets, it has fallen considerably and continues to trend lower. Thus, we believe the 2025 financial year presents a favourable market environment as the path towards lower interest rates comes into view.


Key Stocks

Check Point Software Logo

Check Point Software

Cutcher & Neale Positive Impact Model

Check Point Software is a cybersecurity company headquartered in Israel. They specialise in hardware and software security products designed to protect networks, clouds, endpoints and mobile users.

The company is most well known for its leading artificial intelligence (AI) powered cybersecurity, such as ThreatCloud AI, which uses machine learning engines to identify and block emerging threats.

Check Point was added to our Positive Impact Model last month and represents further tech exposure in the portfolio. The company’s Responsibility Policy outlines its commitment to various United Nations Sustainable Development Goals, including Quality Education, and Responsible Consumption and Production, along with Peace, Justice and Strong Institutions. The company is well-positioned moving forward, supported by AI innovations and partnerships with companies like NVIDIA.

Ventia Logo

Ventia

Cutcher & Neale Australian Shares Model

Ventia is an infrastructure services provider, specialising in the operation, maintenance and management of key assets and infrastructure in the private and public sectors.

The company is one of the key providers in the industry across Australia and New Zealand, offering a range of services such as facility and asset management, engineering, telecommunications, and environmental management throughout all stages of an asset's life.

The stock was added to our Australian Shares Model earlier this year, bringing a strong industrial name into the portfolio. Ventia currently services 50% of private motorways and tunnels, 70% of defence sites and 90% of electricity transmission networks. 

Check Point Software Logo

Check Point Software

Cutcher & Neale Positive Impact Model

Check Point Software is a cybersecurity company headquartered in Israel. They specialise in hardware and software security products designed to protect networks, clouds, endpoints and mobile users.

The company is most well known for its leading artificial intelligence (AI) powered cybersecurity, such as ThreatCloud AI, which uses machine learning engines to identify and block emerging threats.

Check Point was added to our Positive Impact Model last month and represents further tech exposure in the portfolio. The company’s Responsibility Policy outlines its commitment to various United Nations Sustainable Development Goals, including Quality Education, and Responsible Consumption and Production, along with Peace, Justice and Strong Institutions. The company is well-positioned moving forward, supported by AI innovations and partnerships with companies like NVIDIA.

Ventia Logo

Ventia

Cutcher & Neale Australian Shares Model

Ventia is an infrastructure services provider, specialising in the operation, maintenance and management of key assets and infrastructure in the private and public sectors.

The company is one of the key providers in the industry across Australia and New Zealand, offering a range of services such as facility and asset management, engineering, telecommunications, and environmental management throughout all stages of an asset's life.

The stock was added to our Australian Shares Model earlier this year, bringing a strong industrial name into the portfolio. Ventia currently services 50% of private motorways and tunnels, 70% of defence sites and 90% of electricity transmission networks. 

About The Author

Wade is the head of the Investment Services division at Cutcher & Neale and has over 10 years of industry experience in accounting and investment advisory roles.

Wade guides his division on the belief that investment portfolios should be built on transparency and flexibility. His expertise focuses on direct portfolio exposure to both Australian and Global Investment markets.

The information in this publication contains general advice only. It has been prepared without taking your personal objectives, financial situation or needs into account. You should consider whether the information contained within this publication is appropriate for you. Where we refer to a financial product you should obtain the relevant Product Disclosure Statement or offer document and consider it before making any decision about whether to acquire the product.