December 2024 Client Investment Update

from Neil Kendall - Managing Director of Tupicoffs, The Independent Financial Planners

The Australian and international markets have outperformed expectations in the last 6 months. Looking at the 12-month numbers, we've seen the Australian market up 21% and we've seen international markets up 27% over the same period.

There is continuing fighting in the Ukraine, as the Russia and Ukraine war continues to drag on. With another escalating conflict in the Middle East. Despite these conflicts, markets have performed very well.

Inflation is starting to fall around the world. A little more slowly in Australia where consumer spending has dropped, but government spending has continued, keeping inflation a little higher than the rest of the world for a little longer.

Interest rates have dropped in the US, however they still remain higher than Australian rates so there is plenty of movement available for them to come down.

Australian interest rates are expected to drop over the next 12 months but slower and to a lesser extent than was originally anticipated.

It is expected that investment returns will return to a more normal level. The current returns are not sustainable long term.

Donald Trump has been elected and that has generally been considered good for business, and certainly has helped the US market to continue its strong run upwards.

Historic presidencies of Donald Trump indicate that potential volatility will be high depending on policy announcements. Markets might see them as very positive or very negative.

The housing market in Australia has also started to plateau out with house prices no longer rising. Brisbane is now the second most expensive market in the country. Slowdown is also starting to happen in the Sydney housing market. Likely bringing markets back to their normal environment.

We think that 2025 holds some very positive outlooks, for both property markets, and interest rate markets.

We expect to see falls in interest rates over the 2025 year and we would expect equity markets to have more normal returns, in the high single digits.

We're expecting a great year, we look forward to worrying about your money for the next 12 months. So please enjoy your Christmas, don't worry about your money, we'll be doing that for you.

Highlights

• Australian market up 21% and international markets up 27% over 12 months.

• Ongoing conflicts in Ukraine and the Middle East have not hindered market performance.

• Inflation is decreasing globally, though Australia’s rate remains higher.

• Interest rates in the US are dropping, with expectations for Australia to follow.

• Donald Trump’s presidency may cause market volatility but is generally seen as positive for business.

• The Australian housing market shows signs of plateauing, particularly in Brisbane and Sydney.

• 2025 is expected to yield more normal, yet positive investment returns.