02 January 2025
Strong End
The end of 2024 turned out to be far better than anticipated, especially compared to the previous year. While many global forecasts predicted a high likelihood of the U.S. economy slipping into recession by the end of 2024, the reality unfolded differently. The U.S. economy closed the year in strong shape, with inflation on a downward trend and a stable job market. What was expected to be a slow economic phase seemed to result in a soft landing, aligning with optimistic projections.
Expectations for future U.S. economic growth were bolstered by the re-election of President Donald Trump, whose policies are perceived as favorable for the U.S. economy. Simultaneously, the Federal Reserve adjusted its monetary policy stance, reflecting confidence that the economy might not decelerate rapidly. Inflation and the labor market are anticipated to remain relatively steady, especially if Trump implements his planned policies. The Federal Reserve raised its median forecasts for PCE inflation to 2.5%–2.7%, up from the previous projection of 2.1%–2.3%.
The U.S. equity market performed exceptionally well throughout 2024, reaching record highs alongside the stable economy. However, a brief setback in December’s equity rally was triggered by a shift in the Federal Reserve’s monetary narrative. The central bank signaled it would not rush to cut benchmark rates if inflation resurged due to Trump’s policies, lowering the expected rate cut to 50 basis points from the earlier estimate of 100 basis points in 2025.
Global markets are closely watching the potential impact of Trump’s policies. If economic growth accelerates excessively, the risk of recession or stagflation could emerge, making equities vulnerable to corrections. Reflecting on the disparity between market expectations in 2023 and the actual conditions in 2024, 2025 may present a similarly uncertain landscape. A diversified portfolio could serve as a prudent strategy to navigate potential shifts in market dynamics.
Product Recommendation
| EQUITY FUND | |
|---|---|
| MGSED A | MGSED invests in Sharia-compliant Equities Abroad listed in the Sharia Securities List. Categorized as a Long-Term investment with high risk. Investors bear the risk associated with the equity portfolio. |
| MASED A | MASED invests in Sharia-compliant Equities in Asia listed in the Sharia Securities List. Categorized as a Long-Term investment with high risk. Investors bear the risk associated with the equity portfolio. |
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DISCLAIMER
The opinions expressed in the article are for general informational purposes only and are not intended to provide specific advice or recommendations for individuals or specific mutual fund or investment products. It is intended solely to provide education about the financial industry. Views reflected in the content may change at any time without notice. All performance data and investment returns mentioned in this article cannot be used as a basis for calculation to buy or sell a mutual fund. This data is performance records based on historical data and is not a guarantee of future mutual fund performance. Investment through mutual funds carries risks. Investors are required to read and understand the prospectus before deciding to invest through mutual funds.
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