The spectacular bull run in US shares continued with most of the upward momentum continuing to rest squarely on the shoulders of a small section of the market, namely tech and tech-associated companies. This concentration has propelled significant gains in both the NASDAQ and S&P 500 indexes, highlighting the tech sector's current investor confidence in digital and cloud technologies. In fact the S&P 500 saw gains of over 14% (in local currency) in June, only surpassed by the Japanese Nikkei 225 who grew over 18%. 

In stark contrast, our local share market continues to disappoint, and lacks the breadth of sectors and subsectors other global markets offer. June saw a negative growth in the NZX of -1.26%. The New Zealand stock market is largely dominated by companies in the utilities and materials sectors, so has not seen the same level of recovery or enthusiasm. This concentration in a small number of currently underperforming sectors, such as industrials and consumer goods, is having a clear negative impact on the NZX 50's returns. The lack of diversity in higher growth sectors like technology compounds the challenges faced by local investors.

Bond market returns in New Zealand are faring much better as wholesale interest rates start to come off recent peaks. This has been partially triggered by the Reserve Bank of New Zealand's (RBNZ) hints at a more dovish (meaning softer, aka cuts to come) future stance amid subdued economic data. Some investors are starting to strategically buy bonds now to ensure they have a front row seat when the central banks, including RBNZ, finally start their cutting cycle.

Three out of the four central banks around the world who provided policy updates in June held the line of no change to rates. The European Central Bank (ECB) on the other hand bucked the trend, and cut their Official Cash Rate (OCR) by 0.25%. There was absolutely no surprise with this announcement, with the market having "priced this in" - meaning banks had factored in a rate cut when setting their own interest rates.

Softer US consumer data had investors daydreaming about potential policy easing, with hopes pinned on two Federal interest rate cuts by the year's end. Geopolitical tensions threw a spanner into the works, sending oil prices higher. This has repercussions for New Zealand, particularly as the recent removal of the regional petrol tax cuts is likely to provide only fleeting relief to Aucklanders.

The political circus in France added to the global spectacle, with the far-right threatening to dominate the parliament. The last time France had a far-right government was during WWII, and the prospect of having another one was as unnerving as walking on a high-wire without a safety net. In New Zealand, the political stability and economic policies continue to be closely watched, as any changes here could further influence both market sentiment and the policy direction of the RBNZ.

With these diverse global and local influences at play, we can see the ongoing ups and downs of different sectors, countries, and asset types. As always, we prefer to stay diversified, and focus on the long-term rather than speculating short term trends and factors.

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