The Bank of Russia unexpectedly maintained its key interest rate at a record-high 21% , defying analysts’ expectations of another significant hike as inflation remains stubbornly elevated. The decision marks a shift toward a more measured approach in balancing economic growth and price stability. Key Details Inflation Concerns: Annual inflation climbed to 8.9% in November, well above the central bank’s 4% target , with inflation expectations reaching 13.9% in December. Policy Rationale: The central bank cited the significant tightening of monetary conditions after October’s 200-basis point hike as sufficient to resume disinflationary processes. Governor Elvira Nabiullina emphasized avoiding both economic overheating and severe slowdowns. Economic Overheating: Elevated government spending on the war in Ukraine and social programs, coupled with labor shortages and rising wages, have fueled strong domestic demand, exacerbating price pressures...
The year 2024 was marked by transformative shifts in global financial markets, with standout performances from Bitcoin, U.S. equities, and gold, while other assets, like crude oil, faced challenges.
Key Market Highlights
1. Bitcoin’s 136% Surge: A Digital Gold Rush
- Performance: Bitcoin soared 136.88%, becoming the top-performing asset of 2024.
- Drivers:
- Institutional Investment: Increased adoption for its inflation-hedging properties.
- Bitcoin ETFs: Approval in the U.S. improved liquidity and accessibility.
- Technological Advancements: Lightning Network upgrades attracted long-term investors.
- Trump’s Re-Election: Analysts expect lenient crypto policies, including potential tax reductions and compatibility initiatives with the U.S. dollar.
- Outlook: Analysts warn of potential regulatory scrutiny in 2025, but Bitcoin’s appeal may strengthen if inflationary pressures persist globally.
2. U.S. Equities Soar on Tech Leadership
- Nasdaq: +32.74%
- S&P 500: +26.86%
- Key Drivers:
- Generative AI Boom: Companies like Nvidia and Microsoft fueled the tech sector's exponential growth.
- Federal Reserve Policy: A dovish stance mid-year bolstered liquidity.
- Shareholder Returns: Stock buybacks and dividends drove prices higher.
3. Asia-Pacific Markets: Mixed Performance
- Nikkei 225: +17.95%, supported by Japan’s ultra-loose monetary policy.
- Hang Seng Index: +16.48%
- FTSE China A50: +15.86%, recovering late in the year due to supportive policies.
4. Commodities: Gold Shines, Oil Stumbles
- Gold: +28.68%, driven by geopolitical tensions and inflows into gold ETFs amid a weaker dollar.
- Natural Gas: +30.88%, rebounding due to global cold waves and supply disruptions.
- Crude Oil: -3.31%, impacted by the faster transition to renewables, reducing demand.
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