We’re on the home stretch, and 2023 has been a surprisingly good year for investors. Conservative assets have returned to form with a five per cent gain, while world shares have also been strong, returning almost 20 per cent, which is well above the long-term average. In contrast, the local sharemarket has been a notable laggard, with the NZX 50 flat with just two weeks to go. Looking ahead to 2024, there are some obvious positives, such as the prospect of further declines in inflation and poten...
Dec 12, 2023•30 min
Last week was another good one for investors, with shares and fixed income rising further. The S&P 500 in the US posted a 0.2% gain, finishing at its highest level since March 2022, while the local NZX 50 rose 1.1%. Not only was that the sixth consecutive weekly gain (the longest winning streak in more than a year), but it saw the index move back into marginal positive territory on a year-to-date basis. The coming week is a very busy one, as the end of the calendar year looms. Central banks ...
Dec 09, 2023•23 min
November lived up to its name as a very good month for investors. World shares were up 9.3 per cent, the best return in three years. The S&P 500 in the US rallied 8.9 per cent and the local NZX 50 posted an impressive 5.3 per cent increase, the biggest monthly gains for both indices since July 2022. It wasn't just shares that had a great month, with conservative assets getting in on the action too. US bonds had their best month since 1985 (with a 4.5 per cent rise), while the NZX Investment ...
Dec 05, 2023•20 min
November lived up to its name as a very good month for sharemarkets around the world, with the S&P 500 rallying 8.9% and the NZX 50 posting an impressive 5.3% increase. Those were the best monthly gains for both indices since July 2022. It wasn't just shares that had a great month in November, with US bonds posting the best monthly performance since May 1985 (+4.5%) and New Zealand corporate bonds enjoying their strongest monthly gain in at least 20 years. Let's talk about all of that, as we...
Dec 03, 2023•22 min
Shares have delivered impressive long-term returns. The US is the biggest market in the world, and its long history lends itself well to analysis. Between 1900 and today, US shares have returned 9.8 per cent per annum (including dividends). That means an investor has, on average, doubled their money every 7.4 years. Not bad at all. That’s a recipe for wealth generation, and an excellent way to ensure your capital grows more than inflation (which has been three per cent per annum over that entire...
Nov 29, 2023•10 min
There's no shortage of things to watch this week, with Wednesday’s Reserve Bank meeting (which is the last of the year) likely to be the main event. Nobody is expecting any change in interest rates, but the updated projections in the accompanying Monetary Policy Statement will be very important. There will be plenty of corporate earnings releases to monitor across the New Zealand market too, including interim results from market heavyweights Fisher & Paykel Healthcare and Ryman Healthcare, b...
Nov 25, 2023•25 min
US shares had another very strong week, with the S&P 500 rising 2.2%. The index is up 7.6% in November and on track for its best month in more than a year. The NZX 50 in New Zealand was more subdued, although it still added 0.3% for its third consecutive weekly gain. The local market has rallied 3.9% this month, on track for its best performance since January. Looking ahead, it will be a holiday-shortened week in the US, with markets closed for Thanksgiving on Thursday. There will also be an...
Nov 18, 2023•25 min
Many principles of investing are considered compulsory, and one of these is the need for diversification. It can mean spreading your capital over different asset classes, such as bonds and fixed income as well as shares and real estate, or ensuring you own a range of companies across multiple regions and sectors. Being diversified protects you from the risk of major losses, just in case something goes wrong with one of your individual investments or holdings. Let's talk about the basics of diver...
Nov 14, 2023•21 min
The key economic release this week will be the October inflation report in the US. Due Tuesday, the headline consumer price index is expected to slow further, although core inflation is forecast to remain stubbornly high. Markets will also be watching US retail sales on Wednesday. Politics will also be in the spotlight, ahead of Friday's deadline for US Congress to avert a government shutdown as well as the APEC economic leaders' week in San Francisco continuing throughout the week. US President...
Nov 11, 2023•19 min
Investors have been heartened by reports of softer economic conditions, an easing labour market and slowing wage growth in both New Zealand and the US. These are necessary developments for inflation to moderate and interest rates to stop rising. However, the outlook is finely balanced. When unemployment starts rising it tends to keep rising, and even modest increases have historically meant a downturn becomes hard to avoid. We want conditions to weaken, but not too much. So far, so good, but thi...
Nov 08, 2023•14 min
Global sharemarkets have had a difficult few months, with the S&P 500 in the US and the NZX 50 here in New Zealand falling more than ten per cent between the end of July and late October. That’s been unsettling for investors, and there are still plenty of uncertainties ahead of us. However, a case can also be made for a stronger finish to 2023. Here are five reasons why markets could rebound over the balance of the year.
Nov 06, 2023•14 min
Global sharemarkets rebounded strongly last week, with investors encouraged by softer economic indicators and evidence of easing labour markets that could mean interest rates are close to a peak. The S&P 500 in the US surged 5.9%, its best weekly performance in a year, while the NZX 50 here in New Zealand posted the best weekly gain in 16 months with a rise of 3.3%. This week markets will be listening closely to comments from Fed Chair Jerome Powell and watching the Reserve Bank of Australia...
Nov 04, 2023•25 min
After a solid first half of the year, it’s been a difficult few months for the local sharemarket. The NZX 50 has fallen more than ten per cent since the end of July, to just above the post-COVID lows from the middle of last year. This weakness has seen it slip about six per cent into the red on a year-to date basis, putting it on track for a third consecutive annual decline. In data going back to the mid-1960s, New Zealand shares have never declined for three years in a row, making this a somewh...
Oct 31, 2023•25 min
Global sharemarkets remain under pressure, with the S&P 500 in the US and the NZX 50 in New Zealand both down more than 10% since July. Rising global yields have been a key culprits, and although we saw a decline last week these remain close to the highest in many years. This week will be another very busy one, with central bank meetings taking palce in the UK, UK and Japan, as well as key economic releases such as the US jobs report and Chinese PMIs. Locally, the latest unemployment figures...
Oct 29, 2023•22 min
One of our least favourite sharemarket analogies is when it’s said to be just like a casino. While some traders might treat their portfolio like a sports betting account, for genuine investors this comparison couldn’t be further from the truth. You might get lucky a few times at the casino, but the more you play the greater your chances of losing. In contrast, when it comes to investing in the sharemarket, the longer you stay the better your odds of success.
Oct 24, 2023•10 min
Whether to fix or float, and for how long is a common question for borrowers to ask. With interest rates at 15-year highs and household budgets considerably tighter than in the past, there’s more riding on these decisions today. Those who opt for a lengthier fixed term will save some money in the immediate future, but they might find themselves stuck on higher rates if the winds change. In that case, it might be preferable to select a shorter-term rate and keep your options open. As with most mo...
Oct 18, 2023•18 min
There's plenty to monitor in the week ahead, with Federal Reserve officials in focus as six of the seven Board members speak publicly before the blackout period begins ahead of the next meeting. The most important appearance will be that of Chair Jerome Powell, which takes place on Thursday at the Economic Club of New York. China will be in the spotlight on Wednesday, with the release of monthly economic indicators as well as gross domestic product for the September quarter. There will also be p...
Oct 15, 2023•14 min
A change of government was confirmed last night, with Christopher Luxon from the National Party set to be our new Prime Minister. Preliminary figures reflect a much stronger showing than expected from National, which ended with a very healthy 39 per cent of the party vote. However, those hoping for a relatively straightforward two-party coalition between National and Act shouldn’t get their hopes up. With more than half a million special votes still to be counted, there's a good chance NZ First ...
Oct 15, 2023•15 min
The biggest story across financial markets in recent weeks has been rising bond yield. This has pushed up borrowing costs across the board, and sent mortgage rates higher despite the Official Cash Rate remaining unchanged since May. Higher bond yields have also taken the wind out of other asset classes, including the sharemarket. Why is this happening, and what should borrowers and investors be thinking about against this backdrop of interest rate volatility?
Oct 11, 2023•19 min
The military conflict in the Middle East over the weekend has added to the list of geopolitical worries, and led to a fresh bout of volatility across financial markets. The hostilities escalated when militants affiliated with Hamas initiated a large-scale attack against Israel. These tragic developments have led to a significant human toll, and raised grave concerns about an extended conflict. Somewhat ominously, last Friday marked 50 years since the Yom Kippur War started. This armed conflict a...
Oct 09, 2023•16 min
We're back after a week away and there's no shortage of action across financial markets to talk about! Another busy week looms, with a crucial inflation report due in the US just as bond yields hit 15-year highs. We'll also see the September quarter global reporting season begin, with some of the financial heavyweights set to release earnings reports late in the week. On the local front, the election will take centre stage on Saturday. Will we see a change of government, what could that mean for...
Oct 07, 2023•28 min
When it comes to investments, shares and property get most of the attention. However, fixed income is equally as important to the average investor, making up somewhere between 20 and 40 per cent of the typical diversified portfolio. Bonds have been doing it tough since the pandemic, with interest rates moving sharply higher from near-zero levels. However, a tipping point may soon be upon us, and those headwinds might become tailwinds. This time next year interest rates could well be lower than t...
Sep 27, 2023•26 min
Global inflation trends will be in focus in the days head, after a flurry of central bank decisions last week that saw the "higher for longer" interest rate theme become further entrenched. The key release will be personal consumption expenditures inflation in the US, as well as fresh inflation readings in Europe and Japan. Chinese economic indicators will also be closely watched as investors look for further evidence of a stabilisation in the economy, while on the corporate front we'll also see...
Sep 24, 2023•25 min
It feels a little gloomy at the moment. Investors are on the sidelines, many economists seem more downbeat than usual, and the sharemarket has been uninspiring so far in 2023. There’s nothing wrong with a healthy dose of caution, is it really all bad out there? We’ve got our fair share of challenges, and the economy is still facing a bumpy path in the months ahead. It’s natural to focus on these negatives, but we’ve got a few reasons to maintain a glass half-full view as well....
Sep 19, 2023•12 min
Buckle up for another action packed week across financial markets! Three of the world's biggest central banks are meeting, including the Federal Reserve in the US. We've also got inflation reports due in the UK and Japan, as well as the first indicators for how economic activity is tracking in September. Here at home, we'll see the results of another dairy auction as well as the latest quarterly GDP figures. Fonterra is due to report its annual result, while the first live Leaders' Debate from T...
Sep 16, 2023•23 min
The last few years have been very strong for the US labour market, as well as here in New Zealand. Unemployment has been extremely low, wage growth has been strong, and unions have negotiated some historic contracts. This labour market tightness has given workers, particularly those in lower-paid professions, bargaining power they haven’t had for decades. As a result, wage growth (in both the US as well as here) has been the strongest in at least 30 years. However, we’re starting to see a few cr...
Sep 12, 2023•19 min
As always, there's plenty going across financial markets this week. Here in New Zealand, we’ll get the latest migration estimates, as well as electronic card spending and a fresh monthly housing report. Markets will also be watching the Pre-election Economic and Fiscal Update (PREFU) from Treasury on Tuesday. The extent of deterioration in the economic outlook and a likely increase to the borrowing programme will be closely monitored. Elsewhere, the highlight of the economic week will likely be ...
Sep 09, 2023•22 min
China has been a powerhouse of global growth in recent decades, and investors seeking the excitement and opportunity of emerging markets haven’t needed to look much further. However, the world’s second largest economy is facing increasing challenges, bringing its credentials as an obvious investment destination into question. In contrast, India is shaping up as a highly attractive place to do business, as well as invest capital. With a very large population and favourable demographic trends, it ...
Sep 05, 2023•15 min
The S&P 500 in the US rose 2.5% last week, its best weekly performance in almost three months. That wasn’t enough to see the US market finish August in the green, however, with the index ending 1.8% lower for its first negative month since February. The local NZX 50 increased a more modest 0.5%, as investors digested a cautious reporting season and looked ahead to the election with some trepidation. It will be a holiday-shortened week in the US, with markets closed for Labor Day on Monday. I...
Sep 02, 2023•20 min
With just six weeks to go until the election, the local sharemarket seems to be in a bit of a funk. There are a number of reasons for this, and uncertainty over how the political landscape will look beyond October is one of them. Are we likely to see a market rebound in the wake of the election, and would a change a government be a positive for investors? Let's take a look back through history and see what's happened after elections in the past.
Aug 29, 2023•19 min
