What an eventful year it has been! As 2024 comes to a close, we take a moment to reflect on the key events impacting markets in 2024, and the key milestones for Trilogy Funds.

Global developments impacting markets

The ongoing conflict between Russia and Ukraine intensified in 2024, with both nations engaging in escalated military actions, heightening geopolitical tensions globally. At the same time, Israel’s military operations in the Gaza strip, Lebanon and Iran have heightened regional instability in the Middle East.

These geopolitical developments contributed to some volatility in energy markets over the year. However, to date they’ve failed to have any significant impact on oil prices, which have trended downwards despite the conflicts. Interestingly, Chinese demand has proven to be the bigger influence on prices, with the fall in oil prices largely attributed to a slow down in China’s actual growth rate, and market expectations of China’s growth rate going forward.

The outcome of the U.S. presidential election in November saw Donald Trump re-elected, a historic return to office that triggered mixed reactions in global markets. Initially, the U.S. stock market saw a brief rally, buoyed by optimism around Trump’s pro-business stance. However, uncertainty regarding his pending legal challenges and potential shifts in trade policies dampened investor sentiment in the weeks that followed.

Key policy areas expected to influence U.S. and global markets include Trump’s focus on reshoring manufacturing, tighter immigration policies, and proposed tax reforms. These initiatives could impact global trade flows, including U.S. consumption of Australian exports, currency markets, and economic sentiment in 2025 and beyond.

Inflation trends

Inflation was a dominant theme throughout 2024, with Australia seeing significant fluctuations. Early in the year, inflation remained elevated, but by the end of October, the monthly consumer price index (CPI) increased by just 2.1% year-on-year, its lowest level since mid-2021. However, many commentators attribute the low figure to ongoing temporary electricity rebates and volatile petrol prices.

Trimmed mean inflation, the Reserve Bank of Australia’s (RBA) preferred measure, was 3.5% for the year to 30 September 2024, still outside the target range.

Interest rates

The RBA kept official interest rates steady throughout the year, navigating a challenging environment of declining inflation and moderate economic growth. Early in the year, consensus was that the official cash rate target had peaked, and each of the big four banks anticipated a rate cut by the year’s end.

As the year wore on, the confidence of a rate cut in 2024 fell, and forecasts progressively shifted towards a rate cut in 2025. CBA was the last of the big four banks to push its expectation out to next year. As the year comes to a close, CBA and ANZ expect the first of the rate cuts to occur in February 2025, while NAB and Westpac expect we will have to wait until May. Despite this CBA cut both fixed and variable home loan rates earlier this year, with ANZ and NAB trimming rates for variable and Westpac doing the same for fixed home loan rates. This shifting sentiment underscores the delicate balance between inflation control and economic stimulation.

The broader economy and property markets

As 2024 comes to a close, we approach the end of yet another year that we didn’t see the edge of the dreaded ‘mortgage cliff’. The unemployment rate increased slightly over the year but remains low at 4.1%. Household consumption is increasing in the back end of the year and property prices remain strong.

Median property price movements varied across regions, with some early year declines reversing by mid-year, spurred by stabilising interest rates and improved buyer confidence. As at 30 September, PropTrack reported 5.5% annual growth in house prices nationally, with Victoria, ACT and Hobart the only regions that didn’t see growth.

Trilogy Funds in 2024

It was also an eventful year for Trilogy Funds. The Trilogy Industrial Property Trust purchased two high quality assets in Brendale and North Geelong respectively, and divested its asset at Gillman in South Australia at a value 13% above its most recent external valuation. The Trilogy Monthly Income Trust surpassed $750 million in funds under management before 30 June and continues to grow.

We finalised the acquisition of a portfolio of assets from Eildon Capital Group, marking our first foray into convenience retail and large format retail.

2024 is also the year we first appointed personnel on the ground in Perth, Western Australia.

Looking ahead

As we step into 2025, the interplay of easing inflation, steady employment, and global policy shifts will continue to shape the economic landscape. While the challenges of rising construction costs and slowing property markets remain, the groundwork laid this year positions Australia for gradual recovery and renewed growth.

At Trilogy Funds, we look forward to consolidating our achievements from 2024 and continuing to find new investment opportunities in 2025.