The past month was a study in contrasts. While headlines remained heavy with geopolitical tension, including disruptions in the Strait of Hormuz pushing oil prices above US$110 per barrel, global financial markets largely looked past the noise. Driven by a surge of optimism in the technology sector, many international share markets climbed to new heights.

New Zealand: A resilient but quiet month

Closer to home, the New Zealand market experienced a more subdued period compared to its global peers. While international stocks rallied, the NZX50 index ended the month slightly lower, down -0.1%.

Our domestic economy is currently navigating a few hurdles:

• Inflation: First-quarter inflation (CPI) data came in higher than expected.
• Sentiment: Business confidence has weakened.
• Bonds: Despite these challenges, New Zealand government bonds remained stable, returning 0.4%.
• Currency: The New Zealand Dollar (NZD) rose 3.2% against the US Dollar. While this reflects relative strength, it means overseas investment returns are slightly reduced when converted back to NZD.

Global Markets: The AI tailwind

Despite the local pressures in New Zealand, the broader global portion of our funds benefited from a strong run in global sharemarkets.

• Global equities: International shares returned 6.2% (in NZD terms). This growth was largely fuelled by companies involved in AI and technology supply chains.
• Regional highlights: The S&P 500 in the US gained 10.5% (in USD terms) on the back of strong corporate earnings. In emerging markets, Taiwan and South Korea were standout performers, reflecting their role as key technology manufacturing centres.
• Fixed Income: The bond market faced a more complex environment. Rising oil prices sparked concerns about ongoing inflation, which led major central banks to hold interest rates steady. As a result, global bonds fell 1.9% (in NZD terms).

Looking ahead

While New Zealand is feeling the pinch of persistent inflation more acutely than some other regions, our funds remain well-diversified. By balancing high-growth global sectors with stable domestic fixed income, we aim to weather local volatility while capturing the significant gains driven by global innovation.