Global updates: Markets brace for Trump’s second term

Although the Dow Jones Industrial Average Index fell by 5.3% in December, dampened by uncertainty over the pace of future rate cuts, it rose by 12.9% over 2024, underpinned by a resilient domestic economy, lower interest rates, and hopes of deregulation and lower taxes under the impending Trump administration.


  • The Nasdaq breached 20,000 points for the first time
  • Interest rates were cut in Europe and the US
  • Rates remained unchanged in Japan

A strong 2024 for the US: although the Dow Jones Industrial Average Index (DJIA)  fell by 5.3% in December, dampened by uncertainty over the pace of future rate cuts, it rose by 12.9% over 2024, underpinned by a resilient domestic economy, lower interest rates, and hopes of deregulation and lower taxes under the impending Trump administration. Meanwhile, the technology-rich Nasdaq Index breached 20,000 points  for the first time during December, driven up by leading technology stocks including Nvidia, which rose by more than 171%  over 2024. 

“The global rise in protectionism is set to be a key source of uncertainty”

Rate cuts in US and Europe: the Federal Reserve (Fed) cut interest rates  by 25 basis points in December, following earlier cuts in September  and November , taking the key federal funds rate to a range of 4.25% to 4.5%. The rate of consumer price inflation  rose from 2.6% to 2.7% in November and Fed Chair Jerome Powell commented: “From this point forward, it’s appropriate to move cautiously and look for progress on inflation.” The European Central Bank (ECB) also cut interest rates  in December, reducing its deposit rate by 25 basis points to 3%. News of the cut pushed the pound  to its highest level against the euro since the Brexit vote in 2016. ECB President Christine Lagarde  stoked expectations of further cuts to come, saying: “The direction of travel is clear and we expect to lower rates further.” 

Lacklustre outlook for Germany: Germany’s economy is predicted to struggle this year: the Bundesbank warned  that the global rise in protectionism is set to be a key source of uncertainty. Germany’s Dax Index  rose by 1.4% in December and increased by 18.8% over the year, boosted by a strong contribution  from its largest  constituent, software company SAP. In France, however, the CAC 40 Index  rose by 2% in December but declined by 2.2% over 2024, reflecting the country’s recent political upheaval.

Uncertainty in Japan: policymakers at the Bank of Japan (BoJ) voted  by eight to one to leave its key interest rate unchanged at 0.25%. In a speech during December, BoJ Governor Kazuo Ueda  warned of “high uncertainties surrounding future developments” in the US and elsewhere, citing the potential economic impact of the incoming Trump administration. The Nikkei Index  rose by 4.4% in December and by 19.2% over 2024.


To view the series of market updates through December, click here