19/12/2024
Markets react sharply to the Fed's hawkish stance, Bitcoin's volatility continues amidst regulatory shifts, and 2025 outlooks from ABN AMRO and Barclays reveal key investment strategies. Explore year-end planning tips and industry updates.
19/12/2024
Retirement is often described as life's longest holiday. Check out our articles, tips and guides to make sure your retirement pot lasts the distance.
US markets rallied on optimism about the Federal Reserve’s soft landing, while European and Asian markets showed resilience amid economic uncertainty.
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Markets react sharply to the Fed's hawkish stance, Bitcoin's volatility continues amidst regulatory shifts, and 2025 outlooks from ABN AMRO and Barclays reveal key investment strategies. Explore year-end planning tips and industry updates.
US Markets: Federal Reserve's Hawkish Stance Impacts Indices
The US stock market experienced notable declines this week following the Federal Reserve's adoption of a more hawkish stance on monetary policy. Fed Chair Jerome Powell indicated that inflation is not decreasing as expected, and only two additional quarter-point rate cuts are anticipated in 2025. This announcement led to significant drops in major indices, with the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all experiencing their worst performance on a Fed decision day in years.
European Markets: Declines Following Federal Reserve's Signal
European stocks saw significant declines on Thursday, with the STOXX 600 index dropping 1% by late morning, marking the largest percentage decrease in five weeks. This downturn followed the US Federal Reserve's announcement indicating a slower pace of interest rate cuts for the upcoming year, prompting investors to retreat from equities and commodities. Major US stocks also fell sharply, leading to a similar reaction in European markets. Rate-sensitive technology stocks were particularly affected, with notable falls in companies like ASML, Infineon Technologies, and STMicroelectronics. The UK's FTSE 100 fell by 0.9% ahead of the Bank of England's interest rate decision. Meanwhile, government bond yields spiked, and prices for oil and base metals dropped.
Asian Markets: Declines Amid Global Monetary Policy Signals
Asian stocks fell on Thursday following the Federal Reserve's signal of a slower pace of rate cuts next year, with the dollar nearing a two-year high. The yen also weakened after the Bank of Japan maintained steady rates. Wall Street's significant decline influenced Asian markets, with MSCI's Asia-Pacific index dropping 1.6%, Taiwan's tech stocks falling by 1.2%, and Australia's shares sliding nearly 2%. The yen hit a one-month low, impacted by a strong dollar and significant interest rate differences. Bank of Japan Governor Ueda is expected to explain the rate decision, with potential hikes anticipated in early 2025. The Fed's latest announcement indicates only two quarter-point rate reductions by the end of 2025. The dollar index reached its highest level since November 2022. Cryptocurrencies like Bitcoin briefly fell below $100,000, while gold rose by 0.8% and oil prices dropped due to concerns about demand.
Cryptocurrency: Bitcoin's Volatility Amid Regulatory Developments
Bitcoin's price dropped on Wednesday, falling by 3.2% over the last 24 hours to $103,989, following a record high of $108,267 on Tuesday. This decline comes as investors anticipate the Federal Reserve's upcoming interest rate decision. In regulatory developments, Hong Kong's Securities and Futures Commission has approved four more cryptocurrency exchanges, bringing the total number of regulated virtual asset trading platforms in the city to seven. This move is part of Hong Kong's efforts to establish itself as a global hub for digital asset trading.
As we approach the end of the year, it’s the perfect time to review and optimise your financial strategies: Maximise ISA Contributions: Make full use of the £20,000 allowance for tax-efficient savings before the April deadline. Pension Carry-Forward: Consider utilising unused allowances from the past three years to boost retirement savings with potential tax relief. Estate Planning: Loan plans (a form of estate and trust planning) are gaining traction, offering individuals flexibility and income while moving assets outside their estate.
ABN AMRO's 2025 Economic Outlook
ABN AMRO forecasts that 2025 will be significantly shaped by trade tariffs, particularly with the anticipated return of President Trump to the White House. The bank predicts that if tariffs are implemented as planned, European exports to the US will be negatively impacted, potentially halting the eurozone's nascent recovery. China is also expected to face challenges due to increased US tariffs but may offset some effects through currency depreciation and stimulus measures.
Barclays' 2025 Investment Strategy
Barclays anticipates that the pace of rate cuts by US and European central banks will significantly affect bonds and equities in 2025. The bank suggests that while the AI-driven equity market rally and positive economic news in 2024 have been encouraging, investors should remain cautious and consider how fiscal policies and geopolitical developments could impact markets.
St. James’s Place (SJP)
The UK's largest wealth manager has undergone a tumultuous year, implementing significant changes including a new fee model, leadership restructuring, and job cuts. These efforts are part of SJP's strategy to modernise its offerings and adapt to evolving market demands.
Evelyn Partners
The firm recently made headlines as its private equity owners sought to sell its accounting business, with Apax emerging as the successful bidder. This move reflects ongoing consolidation trends within the wealth management industry.
LPL Financial and Ameriprise Financial
The two firms have agreed on a framework for handling disputed customer data amid an ongoing legal battle over recruitment tactics. This settlement underscores the importance of data security and ethical recruitment practices in the financial services sector.
With the new year fast approaching, it’s crucial to reassess your financial plan to ensure alignment with your long-term goals: Diversification: Consider balancing your portfolio to reduce exposure to volatile assets. Tax Efficiency: Utilise tax-saving vehicles like trusts or offshore bonds to protect your wealth. Estate Planning: Review your estate plan, including wills and trusts.
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Retirement is often described as life's longest holiday. Check out our articles, tips and guides to make sure your retirement pot lasts the distance.
Check out our articles, tips and guidesto make sure your retirement pot lasts thedistance.
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