Finally, some good news to share after what has felt like a depressing few months in financial markets. Things are finally (and tentatively) looking up, from several angles. And even if much of this positive news stems from global markets and the superpower that is the USA, we’ll take the positivity as we creep towards the end of the year - and for what will be for many, a well-deserved break.

Global share markets saw a significant rebound in November, after reports came out of the US indicating strong consumer sentiment and annual inflation falling to 3.1% - the lowest CPI figure in five months. This meant that the Federal Reserve Bank - aka “The Fed” - didn’t hike US interest rates further - also signalling that rate cuts may come to the US as soon as mid-2024. This was welcome news, with rate cuts previously predicted to take longer due to “sticky” inflation. 

In terms of actual market moves, the MSCI All Countries World Index (which captures the largest company shares across 23 developed countries) was up over 9.4% for the month of November, closely followed by the US S&P 500 index which saw 8.9% growth. Both results made for strong annual year-to-date performance results.

Closer to home, the New Zealand and Australian markets reflected the positivity of global markets, with the local NZX50 performance pulling ahead of the ASX20 for the first time in a while - the indices growing 5.3% and 4.5% respectively in November. But despite the share market showing a positive rebound, the NZ economy is still not looking too hot going into the end of the year - with stubbornly high interest rates dampening both consumer confidence and retail sales. Given Kiwis’ high dependence on the housing market, lower house prices also continue to have an impact on the economy and confidence levels. 

The global bond markets (which represent much of what we call fixed income investments) finally saw some turnaround after what has been an extremely challenging few months. The US bond market recorded its best month since the mid 1980’s, due to the hope of official rate cuts to come in 2024. NZ’s bond market also saw positive returns for the first time in what has felt like a very long time - with the NZ 10-year bond yield falling significantly to boost bond fund returns.

The buzz word for November seems to have been reiterating what may be a “soft-landing” for the global economy, and although this has led to a positive market outlook for the year to come, it’s worth being cautious in our optimism. We will continue to approach investment as a long-term game and take any short-term volatility (good or bad) in our stride.

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