Market update for period 1 June to 30 September 2025

In June, international equities (i.e. global share markets) recovered steadily following the tariff tensions, with the MSCI World Index rising 3.8%. The technology sector led the gains, supported by easing tariff concerns that helped markets recover from temporary setbacks caused by geopolitical tensions in the Middle East. Emerging markets performed even better, with the MSCI Emerging Markets Index up 4.9% in local currency. New Zealand and Australian equity markets delivered positive returns of 1.5% and 1.4% (AUD) respectively. U.S. Treasury yields declined across the curve amid weaker economic data, which increased expectations of interest rate cuts. This supported fixed interest (i.e. bond) markets, with the Bloomberg Global Aggregate Index (NZD-hedged) returning 0.9% and the Bloomberg NZ Composite Bond Index rising 0.7%.

In July, international equities saw further, more modest gains, with the MSCI World Index up 2.0%. U.S. markets performed well despite President Trump announcing new tariffs. Emerging market equities continued to outperform, gaining 4.8%. The Federal Reserve kept interest rates at 4.25-4.5%, citing moderation in economic activity during the first half of the year. Bond markets declined slightly by 0.2% (NZD Hedged), as yields rose, while local bond markets gained 0.5%. The Reserve Bank of New Zealand kept the official cash rate (OCR) at 3.25%, leaving room for easing if inflation declined as expected.  The S&P/NZX50 rose 1.8% over the month, reflecting cautious optimism but underperforming Australia, where the ASX200 returned 2.4% (AUD) for the month.

August saw strong corporate earnings, moderating inflation and the promise of lower interest rates. The MSCI World Index ended the month up 2.1% in local currency (2.7% in unhedged NZD). The information technology sector (especially artificial intelligence and semiconductor companies) was the primary driver of the market's growth. U.S. Federal Reserve (Fed) Chair Jerome Powell’s comments on a weakening labour market increased expectations of a rate cut in September.  The global bond market was influenced by a combination of factors, including the Fed’s stance, economic data, geopolitical events and ongoing tariff discourse, with the Bloomberg Global Aggregate Bond Index finishing up 0.4% (NZD hedged).

Australian equities delivered a strong return of 3.1% (AUD). Meanwhile, the New Zealand share market lagged but remained positive, ending the month up 0.9%. NZ bonds returned 1.2% as downward pressure on the OCR intensified.