In November, the Reserve Bank of New Zealand (RBNZ) made the notable but widely expected move of cutting the Official Cash Rate (OCR) by 0.5%, also signaling in their quarterly outlook potential further reductions in February if economic conditions continue to improve. This will have implications for borrowers and savers alike; while borrowing costs might decrease, those with savings in traditional products like Term Deposits and Savings Accounts will conversely face decreasing returns.

Across the Pacific, the US Federal Reserve plans a rate cut of 0.25% in mid-December. The financial markets have been jittery, especially following the re-election of President Trump, whose policies can sometimes bring uncertainty to market dynamics. Typically, markets are sensitive to political changes, as they can affect economic policies and international relations.

The property market in New Zealand is seeing some action, with lower interest rates stimulating more home sales. However, this is a double-edged sword for savers and those relying on interest from deposits, as their earnings decrease.

Continuing on with the local economy, unemployment rates in New Zealand are holding at 4.8% but are projected to rise to around 5% by next year. The tightening job market coupled with rising living costs is prompting more Kiwis to seek opportunities abroad. The New Zealand dollar has also dipped to its lowest level this year against the US dollar, at 0.58, compared to around 0.615 last year. This depreciation affects everything from the cost of imports to overseas travel for New Zealanders.

Local investors supporting NZ shares may breathe a sigh of relief with some good news, with the NZX 50 Gross index climbing 3.4% this month. New Zealand government bonds have seen an uptick during November with nearly a 0.7% increase, reflecting a growing appetite for more secure investments in what have been some volatile times.

Turning to the US, the S&P 500 index was up 5.9% in November, with the Dow Jones Industrial index even more impressive at 7.7% and the tech-heavy NASDAQ up 6.3%. The US results often influence global market sentiment, and continue to demonstrate strong returns in 2024 despite varying domestic challenges and uncertainties. Global shares (hedged back to the NZ dollar) saw an increase of 4.9% for the month, which is solid but not quite the stellar gains that the US indexes saw.

Elsewhere, major European and Asian markets have shown a mixed bag of reporting; the European Central Bank's cautious stance amidst varying economic recovery phases in Europe has led to a slight uptick in some European markets, while others have remained stagnant due to ongoing economic restructuring and Covid-19 challenges.

At the end of November each year, the US Thanksgiving holiday typically quiets trading, but this year, some indexes have reached new highs, potentially kickstarting the annual "Santa rally" where markets traditionally perform well at the year's end. However, as we all know - past performance is no indicator of future performance! So we shall have to wait and see what's in store for December markets!

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