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Investment Update - January 2024

Market Update

2024 has been off to a great start for investors with the S&P500 and Dow Jones reaching new all-time highs and exciting investors at the notion that the next bull market has likely arrived.

The US economy is growing at a rapid clip, expanding 3.3% in the fourth quarter. It was much higher than the expectation of 2% from economists. The US economy was expected by many to go into recession last year, but this didn’t happen - in fact, the economy got 2.5% bigger.

The data underscores the continued resiliency of the US economy, despite interest rate hikes from the Federal Reserve. US inflation also declined with the Personal Consumption Expenditures Price Index at 2.7% on an annualised basis, down from 5.9% a year prior.

Core inflation, which excludes food and energy, increased by 3.2%, down from 5.1%. Inflation from the service sector, which has been running hot, is back at 2.6%, the lowest since 2020.

 The NZX50 has also seen significant gains over the last couple of months but is significantly lagging the US on its return to peak levels.

However, this is a positive sign that rate hikes over the past few years have done their part to help get inflation under control, with slow growth an inevitability. Earlier this week NZ’s annual inflation reading came in at 4.7%. This marks a significant fall from its prior 5.6% result in September last year and a long way along the road back to the 1-3% RBNZ target range, from it’s 7.3% peak in June 2022.

These positive inflation results support economic forecasts that 2024 will be a year of interest cuts and monetary easing. However, the Reserve Bank will be wary of acting too quickly and creating an inflationary rebound.

But with banks starting to lower their interest rates, following the decline in swap rates seen in Q4 of 2023, there are plenty of signals that there is positivity ahead in 2024… at long last.

Staff Update

With the start of a new year, Trilogy is pleased to announce the return of a familiar face. Elodie has now returned from maternity leave and will be working Monday to Wednesday going forward as she balances a return to work with caring for her little boy, Mataeya.

Trilogy is thrilled to have Elodie back on board, as we are sure our clients who are familiar with Elodie will be, as well. Welcome back Elodie!


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