Who made money in 2024?

Apple is currently worth more than the entire UK stock market.

via Keming Tan/ Unsplash

The year 2024 was a pretty good one for equities. The global market benchmark returned 14.9% following a 20.6% gain in 2023.

The US equity market was, once again, the star, returning 25% in 2024. Years of US outperformance means that US equities now account for 74% of the MSCI developed market equity index and 56% of the total global market.

A handful of US technology stocks have driven US equities, and with it the global index. One calculation by DataTrek Research suggests that, without the contribution of the so-called “magnificent seven” big tech stocks (Amazon, Apple, Alphabet, Meta, Microsoft, Nvidia and Tesla), the S&P 500 would have risen 6.3% last year rather than the actual gain of 23%.

A strong US equity market can be seen, in part, as a reflection of the strength and dynamism of the US economy. Yet equity markets do not move in lockstep with GDP growth or, indeed, economic sentiment.

German equities returned 12% last year in the face of a shrinking economy and widespread gloom about the German economy. The Italian economy posted a lacklustre growth of just 0.5% in 2024 but Italian equities rose 16%. UK equities rose 9% last year even though sentiment and growth fell away in the second half of the year.

The point is that equity indices offer a very partial view of the health of the underlying economy. Such indices are dominated by multinationals that do not reflect the makeup of national output in which small and unquoted businesses and the public sector play a large role. Currency moves, and expectations of future growth and interest rates, are crucial for equity valuations, but less so for current activity (a weaker euro and the expectation of significant reductions in euro area interest rates helped bolster euro area equities, especially exporters, last year).

A further difference is in the composition of indices. As the outsize role of tech in the US shows, sectoral weightings and performance are everything. One buoyant sector – or large company – can propel a whole index higher. European markets were helped last year by a strong performance from financials which have benefitted from higher interest rates. German renewable stocks also did well, and shares in Germany’s SAP, which is one of the continent’s handful of major tech companies, rose almost 70%.

Equity performance is country specific, idiosyncratic and driven by expectations. China illustrates this. Chinese equities rose 24% last year, a remarkable performance given the level of doubt about the country’s growth potential and worries about the impact of US tariffs. The principal driver of the recovery was the government’s announcement of a series of measures to boost growth and equities. Investors, eyeing a market that looked cheap on international yardsticks, responded enthusiastically. The market has fallen since its October peak, largely on concerns about the risk of a US-China trade war. The performance of Chinese equities this year is likely to be heavily influenced by the willingness of the Chinese authorities to continue to ease policy.

So far, 2025 has seen something of a reversal in stock markets, with Europe slightly outperforming the US. Euro area equities have returned 7% so far this year and the UK market is up 6%. US equities have risen by 4%.

The US market has been hit by a couple of wobbles this year. In early January, concerns over the persistence of US inflation and impact of the new administration’s policies drove up interest rate expectations in the US and around the world. Then the news that China’s DeepSeek appeared to have cracked the problem of creating cheap, proficient AI models prompted a wave of panic in the US tech sector. The US company providing the pick-axes for the AI gold rush, NVIDIA, saw the largest one-day fall in market capitalisation of a single stock in history.

European stocks also seem to be benefitting from the strength of the dollar. This increases the attractiveness of European exports and boosts the euro and sterling value of repatriated dollar income. The strength of the US economy means that US interest rates are likely to stay higher relative to European rates where markets are pricing in significant reductions in the next year.

Turning to other assets, 2024 wasn’t a good year for investors in government bonds. A global index of government bonds returned just 2.7%, far below the 15% return on equities (holders of UK bonds, or gilts, lost 4% last year). Bonds have been hit by the slow pace of interest rate reductions, concerns about levels of government debt and persistent inflation.

House prices in most rich countries rose in 2024 following declines in 2023 but lag far behind returns on equities. The latest available data show that house price inflation in the US and the UK is running around the 4.0% mark with prices in the euro area up 2.6% in the last year.

Holding cash has not been a bad option over the past 12 months, with a Vanguard sterling money market fund returning 5.1% and a dollar money market fund returning 5.2%.

In terms of more exotic investments, gold has done well, rising 27% in 2024 and a further 10% so far this year. The possibility that the new US administration could apply tariffs to imports of gold has bolstered prices and triggered stockpiling in the US. Some speculate that central banks and governments might seek to switch out of dollars and into gold on worries about potential US sanctions. These factors, together with lingering concerns about inflation, have propelled the gold price close to an all-time high.

Bitcoin has also had a strong run, more than doubling in value in 2024. In January, Trump launched his own meme coin $TRUMP at a price of $7. It quickly rose to $74 but has since fallen back and is now trading at $18.

Things have been difficult in two other niche markets. The classic car market in the US and the UK has struggled for the past two years, with prices mainly flat to down. One commentator suggested that demand for older classic cars may be waning as their owners age. The fine wine market has been falling since a peak in late 2022 and is down nearly 24% over the past two years. Wine has struggled as an asset class since it doesn’t provide a yield; falling demand from Chinese buyers has added to the sector’s woes.

Equities have certainly had a good run, but that performance has been heavily dependent on a handful of US tech companies. The “magnificent seven” US tech stocks now account for 25% of the US equity market and 15% of the global equity market. Apple is currently worth more than the entire UK stock market.

Such a concentration in one sector in one country raises fears that the US and global equity indices are less diversified than in the past. Valuations are also high. The price earnings ratio, a measure of a company’s share price relative to its earnings per share, is currently running at around 28x, significantly higher than the US market average of around 18x over the past 50 years. The last time valuations were running at these sort of levels (aside from during the pandemic, when earnings did odd things) was during the dot-com bubble in the late 1990s and early 2000s.

Many commentators have drawn comparisons to that era which was followed by ten years of near flat returns from US equities. As in the late 1990s, today’s soaring valuations are premised on a new technology – this time AI – delivering a step change in productivity growth across economies. Let’s hope the markets are right.

A personal view from Ian Stewart, Deloitte's Chief Economist in the UK. To subscribe and/or view previous editions just google Deloitte Monday Briefing here.