Biggest Financial Moments of 2024

As we bid farewell to the rollercoaster year that was 2024, it's worth reflecting on some financial milestone moments that shaped the year. Here are some of the most impactful financial events that helped shape global markets and economies during the year.

Japan Ends Negative Interest Rates: On March 19, 2024, the Bank of Japan raised its benchmark interest rate for the first time in 17 years from negative to a range of 0% to 0.1%. The rate hike reflected a significant shift in Japan's monetary policy, driven by improving economic indicators, such as steady inflation and wage growth. This policy shift led to a sharp appreciation of the Yen and disrupted global Forex markets, particularly affecting Yen-funded carry trades. On July 31, 2024, Japan's central bank implemented a further 0.25% interest rate hike, which created significant market turbulence by August 2024.

August Market Meltdown: On August 5, 2024, global markets experienced a significant downturn, with major indices plummeting. This was triggered by Japan's unexpected interest rate hike and concerns over a slowing U.S. economy, leading to increased market volatility and investor anxiety worldwide. In the United States, the Dow Jones Industrial Average (DJIA) fell 2.6%, while the S&P 500 and Nasdaq Composite declined by 3%. Tech giants bore the brunt of the crash, with the "Magnificent Seven" (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla) stocks losing nearly $1 trillion in market capitalization. The sell-off extended into the Forex and commodities markets, highlighting the intricate interconnectedness of the global financial systems.

Federal Reserve's Interest Rate Cut: In a pivotal shift, the Federal Reserve announced its first interest rate cut since the pandemic recovery, reducing the Federal Funds Rate to a range of 4.75%-5.00% during the September 18, 2024, meeting. This policy shift highlighted the Federal Reserve's commitment to achieving a "soft landing" for the U.S. economy - balancing efforts to cool inflation while maintaining employment growth. The rate cut had significant repercussions in multiple markets. Bond yields fell as investors anticipated lower borrowing costs, while the Forex market saw a mixed response, with the U.S. dollar weakening against some currencies amid expectations of reduced rate differentials. In both November and December of 2024, the Fed again dropped rates. This reflects optimism that the Federal Reserve will continue to support growth while carefully managing inflation risks.

Donald Trump's Return to the Presidency: In November of 2024, Donald Trump was re-elected as President of the United States. His decisive win initially alleviated political uncertainty, providing a boost to financial markets. Key sectors such as energy, defense, and finance experienced notable gains, fueled by expectations of Trump's pro-business policies, such as tax cuts, deregulation, and increased government spending. Mr. Trump pledged during his campaign to make the United States the "crypto capital of the planet.' Bitcoin has more than doubled in value since the start of 2024, and has risen just over 50% since Trump was re-elected. Mr. Trump's return to office will influence fiscal and economic policies and impact market dynamics.

Surge in IPO Activity: The U.S. initial public offering (IPO) market saw significant growth in 2024. According to Dealogic, a capital markets data provider, IPOs raised over $41 billion last year - up from $24 billion in 2023. This resurgence has been attributed to increased investor optimism and favorable market conditions, with high-profile IPOs anticipated in the coming year. Market participants widely expect 2025 to be a boom year for initial public offerings as President-elect Donald Trump eases regulation while the Federal Reserve cuts interest rates. "Deregulation will make it easier for earlier-stage companies to gain traction and grow in their specific business markets," said Ross Carmel, a partner at IPO-focused law firm Sichenzia Ross Ference Carmel.

For traders and investors, staying informed and understanding the far-reaching impacts of these developments is essential for navigating the complexities of today's economic landscape and seizing emerging opportunities. The events of 2024 underscore the ever-evolving nature of global finance, where policy decisions, leadership changes, and market sentiment intertwine. As we look ahead to 2025, let Arbitrage Trade keep you up to date on new market trends so your account can thrive!