10 market highlights of 2024

On the 10th day of Christmas, Livewire gave to me...
10 market highlights of 2024

There’s a classic joke about the elevator operator being asked how he likes his job. The response?

“It has its ups and downs”.

The same could be said of the stockmarket. A good year is where there are more ‘ups’ than ‘downs’, and vice versa.

By any objective measure, 2024 has been a good year for investors. And given we’re generally a positive bunch, we wanted to put together a top 10 list focusing on the market highlights of the past 12 months.

Here goes.

1. Record highs for major indices

Whilst we all know that the Australian (ASX 200 and All Ordinaries) and US markets (Dow Jones, S&P 500, and Nasdaq) hit all-time highs in 2024, numerous other global markets also hit record levels at some point throughout the year.

No less than the German DAX, the UK’s FTSE 100, Japan’s Nikkei 225, Canada’s TSX, and the Netherlands’ AEX also clocked all-time highs.

These milestones indicate a year of robust growth across various global markets, driven by positive economic indicators and investor sentiment. 

Ultimately, it has been a good time to be an equities investor.

2. Strong banking sector

If I had a dollar for every time someone has written “banks are a cornerstone of Australian investors’ portfolios” this year, I probably still wouldn’t have enough to buy one Commonwealth Bank share – that’s how much CBA has gone up this year.

But the statement remains true and strength in the banking sector this year has proven a boon for Aussie investors, contributing significantly to the circa 10% year-to-date performance for the ASX 200. The financials sector has been the second-best-performing ASX sector, with a year-to-date gain north of 30%.

The big question, of course, is whether the banks can replicate the same performance next year. And whilst most lean towards ‘no’, no one would have picked their performance this year either.

3. Resilience in the Australian consumer

At the start of this year, it was widely thought that the surge in interest rates in 2023 would eventually crush the consumer and decimate consumer discretionary stocks.

In another case of “things that pundits got wrong for $1000”, this simply was not the case, with the sector the third-best performer year-to-date, up circa 24%.

Despite high interest rates, consumer discretionary stocks performed solidly, with companies such as Lovisa (ASX: LOV) and ARB Corporation (ASX: ARB), to name a few, showing strong sales growth amid robust consumer spending behaviour.

4. Tech sector flying

Whilst the financials and consumer discretionary sectors have enjoyed stellar returns in 2024, they pale in comparison to the performance of the tech sector, which has surged circa 50% year-to-date.

AI, of course, is the rising tide that has lifted all boats, with names like Nuix (ASX: NXL), Life360 (ASX: 360) and Appen (ASX: APX) up more than 200% each, whilst Catapult (ASX: CAT), Bravura (ASX: BVS) and TechnologyOne (ASX: TNE) up more than 100% each.

In fact, at the time of writing, 44 stocks in the ASX information technology index had gone up 40% or more in 2024. Astonishing.

5. Strength in REITs

Theoretically, higher interest rates are bad news for real estate investment trusts. The reasons are myriad, but primarily, higher rates increase borrowing costs for REITs, squeezing profit margins and reducing overall profitability – particularly for those with significant levels of debt.

The other factor is that given REITs are often viewed as income-generating investments, in a rising rate environment yields on bonds increase, making them more attractive compared to REIT dividends.

You wouldn’t know it looking at the numbers, however. The real estate sector is up around 15% year-to-date, good for the fourth-best sector performance overall. Of course, it helps when sector heavyweight, Goodman Group (ASX: GMG) is up more than 50% in the last year.

6. Nvidia’s dominance

Without diving into the record books, it would be hard to argue that there has been a more dominant stock in any single year than Nvidia (NASDAQ: NVDA) has in 2024. For many global equity managers, the ability to outperform has been somewhat binary this year – you either held Nvidia and gave yourself a chance to outperform, or you didn’t.

The stock is up around 170% year-to-date… not bad for a company that started the year with a market cap already north of $2 trillion.

What has driven the surge? 

Well, the market’s fascination with AI has helped, but here’s a stat that blew me away - Nvidia secured an unprecedented 90% share of the global GPU market in Q3 2024, significantly outpacing competitors like AMD and Intel. Furthermore, the company holds between 70% and 95% of the AI chip market, underscoring its critical role in powering AI applications across various industries.

7. The Magnificent Seven's performance

Whilst Nivida has garnered most of the attention, the performance of the entire Magnificent Seven has been a highlight – provided you were holding them, of course.

Here is the performance of each of the Seven so far this year;

• Apple (AAPL): Up approximately 45%.
• Microsoft (MSFT): Up approximately 40%.
• Alphabet (GOOG): Up approximately 30%.
• Amazon (AMZN): Up approximately 35%.
• Nvidia (NVDA): Up approximately 170%.
• Tesla (TSLA): Up approximately 38%.
• Meta Platforms (META): Up approximately 50%.

8. Bitcoin's surge

As much as there are large swathes of the investing community yet to come around to the opportunity that is crypto (and, in fact, may never), the rally in Bitcoin has been spectacular.

The digital currency is up around 155% year-to-date, with the latest surge coming on pro-crypto commentary from US President-elect Trump.

Just this month, Trump announced plans to establish a US Bitcoin strategic reserve, similar to the national strategic oil reserve and has previously said, "We are going to accomplish something significant with cryptocurrency because we do not want to fall behind China or anyone else".

9. Federal Reserve interest rate cuts

The Federal Reserve cut interest rates by 50 basis points in September, marking its first reduction in over four years. They went again earlier this week, cutting by a further 25 basis points.

Why is this one of the highlights of 2024? 

Well, interest rate cuts are good for equities, and the decision to move was pivotal in boosting investor confidence and market performance.

Ultimately, the cutting of interest rates signalled to the market that the fight against inflation, which dogged markets since late 2021, was close to being won. And with the Federal Reserve pulling the trigger, it allowed other central banks to do the same. 

Except for our RBA, of course, but hopefully we get a cut next year.

10. Outlook 2025

While 2025 hasn’t even arrived yet, the positive sentiment towards next year is already a highlight. After a couple of tough years where investors were right not to have a positive outlook, things have changed significantly.

The inflation genie is largely back in the bottle, recession fears have abated, interest rates are likely coming down, employment remains strong and, overall, the economy is healthy.

As we all know, things can change very quickly, but it’s nice to be heading into the new year with an outlook more positive than negative.