Fund watch

What happened in Q4?

Here are some key themes from the final quarter of 2024:

Trump heading back to the White House: Donald Trump defeated Vice President Kamala Harris to win the 2024 US election. Trump’s victory, and the Republican sweep of Congress, was largely seen as good news for equity markets with deregulation and pro-business policies likely to support local companies. Trump has vowed to put tariffs on Chinese imports, while he also said he would impose tariffs of up to 25% on Canada and Mexico.

A resilient US economy: The US economy continued to power ahead. Inflation, as measured by the Personal Consumption Expenditures (PCE) price index, has moderated but remains above the Fed’s 2% target. Meanwhile, the latest non-farm payrolls report showed a gain of 227,000 jobs in November, signalling strong labour demand, even if the unemployment rate edged up slightly, to 4.2%. And growth, as measured by GDP, grew at a healthy 3.1% pace in the third quarter, propelled by consumer spending.

Fed delivers two rate cuts but indicates a slower pace of easing ahead: Following its 50 basis point cut in September, the US central bank followed this up with two further 25 basis point cuts in November and December. The Fed’s easing bias was generally supportive of markets, however at its latest meeting it indicated a more cautious approach going forward – forecasting only two rate cuts in 2025, down from the four it predicted previously. This put financial markets on the back foot heading into year-end.

This article has been prepared by ANZ New Zealand Investments Limited (‘ANZ Investments’) for information purposes only and it should not be treated as financial advice.

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