2024 was marked by an increase in geopolitical tensions compared with 2023. To the prolongation of the Israel-Hamas conflict and of the Russia-Ukraine war, we had to add the uncertainty derived from the many elections that were held across the world, with incumbents ceding power or losing their majorities in many cases. On the trading front, tensions increased throughout the year, with Chinese subsidies to domestic manufacturers causing concern to importing countries. Despite these tensions, investors continued coming to the markets, with APAC and the Americas regions reaching record trading volumes and market capitalisation. Issuers however are faltering and, with the exception of the Americas region, the number of IPOs declined in 2024. This should ring alarms and highlights the need of policy action to support capital markets and reverse this trend.
In 2024 we also saw substantive changes in monetary policy across the world. The US Federal Reserve started lowering interest rates in September, and decreased them further in November and December, in a clear signal of monetary policy relaxation, and of a decrease in inflationary pressures. In a similar fashion, the European Central Bank cut interest rates four times during 2024, and the Bank of England cut rates twice. On the other hand, the Bank of Japan made a significant shift in its monetary policy and moved to positive interest rates, generating volatility in the FX markets and leading to an appreciation of the Yen. Against this background, volumes in interest rate derivatives increased in 2024, with options and futures following opposite trends throughout the year. We would have likely also seen an increase in currency derivatives, except that the sudden drop of volumes in India (as a consequence of a regulatory change) dragged volumes down in the second part of the year.
Except otherwise stated, the analysis references a 5-year period (from January 2020 to December 2024).