The past year marked another period of growth for U.S. stock markets. The S&P 500 index rose by 26%, while NASDAQ surged by 30%. In contrast, Polish stock exchanges fared significantly worse – the WIG index posted a modest 1.5% gain, and WIG20 ended the year with a 4% decline. Against this backdrop, the European Stoxx 600 index gained 6%, reflecting the diverse performance of global markets and the challenges investors faced in 2024.
Strong Year for U.S. Markets
Similar to the previous year, 2024 proved exceptionally favorable for U.S. equity markets. The impressive performance of the S&P 500 and NASDAQ indexes highlights the strength of the U.S. economy and the dynamic growth of the technology sector. In Europe, although the Stoxx 600 showed gains, its growth was considerably slower than in the U.S. Meanwhile, Polish indexes underperformed – with WIG20 ending the year in the red and WIG posting only slight gains, reflecting ongoing struggles on the Warsaw Stock Exchange.
Interest Rate Cuts Drive Global Trends
One of the key developments in 2024 was the global trend of interest rate cuts. The European Central Bank reduced rates by 1%, and the Federal Reserve cut rates by 0.75%. These actions aimed to support economies and counteract recessionary pressures. The financial, industrial, and telecommunications sectors benefited significantly from lower capital costs. In Poland, however, the Monetary Policy Council adopted a more cautious approach, with interest rate cuts likely postponed until 2026.
Technological Revolution Takes Center Stage
The past year was marked by a technological revolution, with artificial intelligence (AI) becoming a cornerstone of development across various industries, from IT to manufacturing. Investments in AI reached hundreds of billions of dollars, and their impact was evident in stock markets, where technology companies dominated performance rankings. AI transformed business models, accelerated automation, and enhanced operational efficiency.
The Dollar’s Strength and Political Shifts
The year’s end saw a significant strengthening of the U.S. dollar, driven by the U.S. presidential elections and the declarations of the new administration under Donald Trump. Policies centered on “America First” and announced tariffs on imports from China and Europe sent shockwaves through global markets. The strong dollar weakened emerging market currencies, including the Polish zloty, complicating investments outside the U.S.
Outlook for 2025
The upcoming year promises to be equally eventful. In Poland, inflation is expected to continue falling, potentially reaching 3% by the end of the year. Public investments, such as the Central Communication Port and the construction of a nuclear power plant, could stimulate the economy and positively impact the Polish stock exchange. Poland’s presidency of the European Union could further highlight its regional importance.
In the U.S., the Federal Reserve is anticipated to continue cutting interest rates, albeit at a slower pace. The American economy is projected to grow by 2–3%, with the technology sector maintaining its leadership in growth. Favorable regulations may further support the development of the cryptocurrency market.
Risks and Opportunities Ahead
However, 2025 is not without risks. Geopolitical tensions, such as the conflict in Ukraine or U.S.-China rivalry, could affect global markets. A strong dollar and U.S. protectionist policies may limit growth in emerging markets, including Poland, although they also present opportunities for portfolio diversification.
Key Takeaways from 2024
The year 2024 underscored the strength of the U.S. economy and its financial markets. Investors focused on technology and AI achieved the best results, while traditional sectors like energy faced challenges. Despite being one of the fastest-growing economies in Europe, Poland’s stock exchange once again fell short of investor expectations. Success in 2025 will depend on the ability to adapt to changing market conditions and effectively monitor global trends.
Author: Paweł Majtkowski, Analyst at eToro Poland
Source: CEO.com.pl
