It was one of the best years of the last decade for global stock markets. Wall Street tops, with Nasdaq and S&P 500 just under 30%. But Europe is also celebrating, with Piazza Affari in third place with +12.5% in twelve months. The prices were driven by the push of the technological and financial sectors and a more stable return of inflation. 2025? The bullish trend should continue, but there are also some risks, starting from the unknown bubble linked to Artificial Intelligence.
At a global level, the MSCI ACWI index speaks for itself, representing 99% of the world stock universe and which has recorded an increase of 21.2% since the beginning of the year. The best performance was once again that of the Nasdaq (+29%), driven by the boom in the technology sector, with stocks such as NVIDIA and “Magnificent 7”. The S&P 500 also closed with an excellent +26.5%. In Europe, Frankfurt leads (+19%) followed by Madrid (+14%). Third place for Piazza Affari with +12.5%, thanks above all to the driving force of the banks. Paris, on the other hand, did badly, with the political crisis and growing public debt closing 2024 with a decline of 2.5%.
Looking at Milan, the FTSE MIB index exceeded 34 thousand points, with the banks as the absolute protagonists: the credit index grew by 55%, with stocks such as Monte dei Paschi di Siena, Banco BPM and UniCredit which recorded double increases figure. Mergers and acquisitions also had an impact on the rally. The insurance sector also shone (Unipol and Generali in the lead) and a positive sign for Leonardo (+73.1%), supported by the increase in defense spending. However, utilities and some giants such as STMicroelectronics (-47.6%) and Stellantis (-41.4%) suffered. Eni (-17.5%) also suffered, although partially mitigated by high dividends.
What will happen in 2025? Forecasts point to more moderate global economic growth. A +0.9% is estimated for the Eurozone and a +2% for the United States. And moderation is also expected with regards to inflation, after years of boom. The monetary policy of the ECB and the Fed, therefore, will always be decisive also for the stock market, primarily the banking sector. The upward trend that began in 2024 should therefore continue and an increase in growth is expected. 2025 promises to be another crucial year for cryptocurrencies. In 2024, the approval of Bitcoin ETFs and the exceeding of the 100 thousand dollar threshold. Also on the table for the new year is the potential creation of government reserves of Bitcoin. Many analysts believe that we will see unprecedented growth in the cryptocurrency market, especially driven by Trump’s return to the White House.
But there is no shortage of risks. The first concern is the overheating of some sectors, especially that of artificial intelligence. Extremely fast growth for the sector with stratospheric valuations based in many cases on projections of future profits that are not always realistic. The alarm of a possible financial bubble has already been raised by the ECB. If this bubble were to burst, the repercussions could extend to the entire technology market and also penalize global stock markets.
A second significant risk is geopolitical tensions. The war in Ukraine and the Middle East and the increasingly tense relations between China and Taiwan also worry the markets. Escalation means commodity prices, particularly oil and gas, shooting up and pushing inflation. And this is combined with the new American presidency, with protectionist policies and more closed relations between the USA and China, but also with Europe.
Also looming over the markets is public debt, which continues to grow in many countries where restrictive fiscal policies, necessary to contain the deficit, could in turn slow down economic growth, penalizing stock markets. And the unknown of monetary policies remains. The expectation is for a gradual reduction in interest rates, but any signs of persistent inflation could force central banks to maintain a more restrictive line. This would have a negative impact on global markets in 2025.
