Bitcoin Surges 130% in 2024 Amid Trump Policies

Bitcoin soared 130% in 2024, hitting all-time highs due to favourable policies under the incoming Trump administration. The US dollar rose 7% to a two-year peak, exerting pressure on emerging market currencies and contributing to a 12% drop in the yen this year. Global markets remain cautious ahead of US core PCE inflation data, with futures pricing limited rate cuts for 2025 and benchmark 10-year Treasury yields climbing above 4.5%.

Equities

The FTSE 100 dropped 1.1% on Thursday, reaching its lowest point in four weeks, as sentiment was hit by the Federal Reserve’s cautious outlook for 2025 and the Bank of England’s decision to maintain borrowing costs. The FTSE 250 also declined 0.9%. Industrial metal miners fell 2.1% following weaker copper prices, while rate-sensitive real estate firms saw a 2.5% decline.

Water utilities provided a contrast, with Severn Trent shares up 0.9% after Ofwat approved a 36% increase in water bills over the next five years. Serco Group led the FTSE 250’s gainers, rising 8.4% on a positive outlook for 2025.

In the United States, markets ended mostly unchanged after an initial recovery faded. The S&P 500 slipped 0.09%, the Dow Jones Industrial Average added 0.04%, and the Nasdaq Composite dropped 0.10%. Economic data aligned with the Federal Reserve’s stance, with weekly jobless claims falling more than anticipated and third-quarter GDP growth revised upward to 3.1%.

Micron shares fell sharply by 16.2% after issuing a revenue and profit forecast below expectations, pulling the semiconductor index down 1.6%. Homebuilder Lennar reported weaker-than-expected quarterly results, leading to a 5.2% decline in its stock and a 2.6% drop in the housing index.

Banking stocks edged up 0.3% as rising Treasury yields improved profit prospects for lenders. The benchmark 10-year Treasury yield hit a seven-month high at 4.594%. Market volatility eased slightly, with the CBOE volatility index closing at 24.09 after spiking the previous day.

Forex & Commodities

The US dollar strengthened to a two-year high, buoyed by the Federal Reserve’s firm stance on interest rates, which are expected to remain elevated into 2025. By the end of the week, the dollar was up 1.5%, with the DXY index reaching 108.53. The yen briefly slid to a five-month low of 157.93 per dollar before recovering slightly to 156.95 after Japanese officials warned of possible intervention. The Bank of Japan kept rates unchanged, with Governor Kazuo Ueda offering no clear indication of an imminent hike, leaving markets to speculate on a potential move as early as March.

Sterling declined 0.1% to $1.2489, hitting a one-month low earlier in the session. The Bank of England's decision to hold interest rates steady at 4.75% and a wider-than-expected split in the vote led markets to price in a more dovish outlook, with additional rate cuts expected in 2025.

Gold prices slipped 1.6% over the week, trading at $2,604.10 per ounce on Friday. The Federal Reserve’s cautious stance on rate cuts dampened demand for non-yielding assets, although a slight recovery was seen ahead of US core PCE inflation data.

Oil benchmarks Brent and WTI fell 3% for the week, trading at $72.55 and $69.06 per barrel, respectively. Concerns over slowing demand growth in China, highlighted by Sinopec’s forecast of a peak in crude imports by 2025, weighed on prices. A stronger dollar also added pressure, making oil more expensive for other currency holders.