2024 : artifical intelligence and barbarian relics

Yet gold, stocks linked to artificial intelligence and crypto-currencies which are intrinsically opposed in their design, are on the podium of the best performers in a year that will remain exceptional for its results and the continued trajectory of its progress.

2024 was a highly political year, with more than half the world's population called to the polls. Russia re-elected Vladimir Putin as expected, while Donald Trump, after an assassination attempt and facing a new Democratic candidate, will return to the White House next January. The European elections led to the dissolution of the French National Assembly, bringing the country to a level of instability not seen since the Third Republic. Even Argentina is in the news, with a president who has introduced drastic cost-cutting measures (with the chainsaw, in his own words) that have enabled the country to return to a budget surplus not seen for more than a century!
There are many political changes to come in a geopolitical context that is as fluid as ever: the Ukrainian conflict continues, Syria has been overthrown, the war in Palestine continues, the BRICS countries continue to expand, and a multilateral system is being set up to limit the use of the US dollar and facilitate bilateral trade. Economic, political and monetary dynamics are changing.
After major concerns about inflationary dynamics, central bank action has helped to stabilise inflation at acceptable levels. The year 2024 will therefore have enabled us to regain a degree of comfort in this respect.

US Inflation Trend

This marked the start of a cycle of interest rate cuts by the major central banks. The Fed has cut interest rates 4 times, the ECB 3. Rates remain high, so there is room for them to fall to support the economy, which is in the throes of a slowdown. This is particularly true in Europe, and especially in Germany.
It was the Swiss National Bank that took the lead on rate cuts back in March, with a total of five cuts over 2024, bringing the key rate down to 0.5%.

 Key interest rates in 2023-2024 (%)

The election of Donald Trump and the possibility of tariffs being introduced could change the outlook by recreating inflation to reinvigorate US industry. This is what led the Fed to tone down its policy slightly at the end of the year.

Concentrated performances

With central banks talking rather more favourably about 2024 and good economic indicators, equities were particularly popular with investors. It was therefore an excellent year for risky investments, even though there were major differences in performance, whether in terms of geography, type of stock (growth vs. value) or size (large caps vs. small caps). The differences are always very marked.
The Nasdaq and its technology stocks was the best index of the year, followed by the US and Japanese markets. Korea, Brazil and Australia close the gap. France came under pressure due the less encouraging outlook in the luxury goods sector . China is gradually recovering from its property problems, thanks to a massive aid plan put in place by the government.

Trends in the main equity indices

US Equity market performance was highly concentrated around a few stocks that captured the bulk of investor inflows. The magnificent 7 (Apple, Nvidia, Microsoft, Tesla, Amazon, Meta, Alphabet) are the main beneficiaries.

Evolution ofmagnificent 7

Looking at Nvidia, Meta, Microsoft and Amazon alone, in 2023 40% of the Nasdaq's performance came from these 4 stocks alone. In 2024, more than 50% of the Nasdaq's performance will come from these 4 stocks alone. So excluding artificial intelligence-related stocks in 2024, meant not performing at all.

Impact on performance (billions USD)

The Swiss market was disappointing in 2024. It lagged behind the other stock market indices throughout the year.

Evolution in SMI in 2024

The main reason for this was Nestlé. Under pressure over a number of issues (Buitoni, water etc), the change in general management is taking time to convince investors. The stock, which has a value profile, has been neglected by investors, who have favoured growth stocks such as technology throughout the year. With a 20% weighting in the Swiss market's flagship index, Nestlé's 20% annual loss has clearly not gone unnoticed.

Performance of the main SMI Stocks

Gold and crypto-currencies celebrate

After 2023, when the CHF acted as a safe haven, 2024 saw a fairly balanced trend in currencies against the CHF.
The USD gained almost 8% against the CHF in 2024. This positive performance was due to higher interest rates than in Switzerland, but also to the positive momentum generated by a presidential election year.

Evolution exchange rate USD/CHF in 2024

In the end, the EUR remained relatively stable, despite having made a substantial profit in the first half of the year. France's difficulties are probably not unrelated to this turnaround.

Evolution exchange rate EUR/CHF in 2024

Finally, the traditional currencies are depreciating against CHF: the Argentine peso, the Russian rouble and the Turkish lira. The Mexican peso is depreciating this year after appreciating strongly in 2023.

Currency moovements against CHF

The commodities index rose by 9% over 2024. Agricultural commodities and precious metals were the main contributors to this result. Cocoa was the biggest riser, gaining 200% over the year.

Trend in the commodities index in 2024

Oil prices in 2024

Finally, gold is having an excellent year, just as it did in 2023. Gold purchases by BRICS central banks are one of the main reasons for this positive momentum, which is not at all affected by the strength of the US dollar.

Evolution of gold in 2024

Demand for gold has spread to other precious metals such as silver and gold mines. However, these two assets are still far from their all-time highs, unlike the yellow metal, which broke record after record throughout 2024.

Precious metals trends

In a potentially similar asset class, crypto-currencies are having an exceptional year. The best-known of the crypto-currencies, Bitcoin, even reached USD 100,000 at the end of the year, up 120% by 2024.

Performance of Bitcoin in 2024

Key rates down

2024 marks the start of a cycle of rate cuts for the main Western central banks. 

Trend in US 10-year in 2024 (%)

Nevertheless, 10-year yields in the United States continued to rise over the year. This obviously had a negative impact on international bond performance. It was the only asset class to end the year in negative territory.
The trend in European yields is similar, but it also shows the crisis in France through the yield differential between France and Germany, which is at a level not seen since the European crisis of 2011-2012.

France-Germany 10-year yield differential (%)

Switzerland had a different year, with long-term rates following the same path as the cuts decided by the SNB. With the 10-year interbank rate at 0.3%, the fear of negative rates is making a comeback in Switzerland.

Swiss 10-year interbank rates in 2024 (%)

These favourable interest rate movements enabled the Swiss bond index to have another excellent year, unlike its foreign counterparts, with a performance of more than 5%.

SBI performance in 2024

These favourable interest rate movements enabled the Swiss bond index to have another excellent year, unlike its foreign counterparts, with a performance of more than 5%.

Swiss Real estate market in 2024