Monthly View.

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.

The Australian share market continued to outperform the New Zealand market. The ASX 200 Accumulation index was up 1.1% in NZD whereas the NZX 50 index declined 3.2% in May.

The New Zealand share market enjoyed a positive April with the S&P/NZX 50 Gross index up 1.4%. April’s better return was insufficient to offset the declines in the prior two months.

March was a month of further gains for equity markets locally and globally, while bond markets were flat or negative for the period. Read on for our expectations of these asset classes over the near term.

The prospect of increasing inflation should not be regarded as uniformly negative for markets. Central banks have been striving to encourage modest inflation for several years.

Share markets were subject to a variety of unusual circumstances in January. Although the events of the month were tumultuous the New Zealand market ended the month marginally positive.