Monthly View.

The NZ share market1 declined 1.9% over the month, dragged down by both Fisher & Paykel Healthcare (FPH) and A2 Milk.

Share markets returned to positive territory in March. The New Zealand share market gained 1.1%. The overall market gain was made despite Fisher & Paykel Healthcare, the largest New Zealand listed company, continuing to weaken.

31 New Zealand companies reported in February. These company reports provided the foundation for a +0.7% return from the NZX 50 over the month.

With rampant inflation the general response from central banks is to raise interest rates.

On a full year basis international shares have generated highly satisfactory returns. The return from the S&P500 over 12 months in NZ$ was +32%.

International shares, particularly US shares, have performed exceptionally this year. The S&P 500 and NASDAQ in USD terms are both up 43% on an annual basis.

New Zealand outperformed other share markets with a marginal positive return of +0.4% for the month.

August is a key reporting month for listed companies and did not disappoint. The anticipated rebound in earnings was evident and results broadly exceeded expectations. This was reflected in share price movements.

While the New Zealand and Australian economies are experiencing the same macroeconomic conditions (rising inflationary pressure, unemployment at low levels and rising house prices as key examples), the performance of the respective share markets is diverging.

Fixed interest and share markets were both focused on the inflation outlook in June. If inflation accelerates, and proves to be persistent, then central banks will be forced to take action to limit the level of price rises.