Quarterly Market Comment

For the quarter ended 30 November 2025

• Global equity markets continued to perform well, with the MSCI World Index gaining +5.6% over the past three months. A weaker local currency provided an additional tailwind, with returns of +8.5% when measured in New Zealand dollars.
• Performance across global markets has been more mixed in recent months. US equities have gained +6.3% and New Zealand is up +4.3%, while the Australian market slipped -3.0% over the quarter.
• Fixed income returns were positive. New Zealand investment-grade corporate bonds rose +1.0% for the quarter, bringing 12-month returns to +6.3%.

A healthy quarter for global markets

Global equity markets have continued to post strong gains over the past three months. In the United States, shares extended a buoyant run through to mid-October, supported by solid company earnings and sustained enthusiasm for AI-related investment. Much of the US market’s strength has come from a small group of very large technology, semiconductor, and data-centre companies.

As markets have climbed, so too has talk of a potential AI-driven bubble. Comparisons with the dot-com era of the late 1990s have become increasingly common. We find this comparison unhelpful. Today’s environment lacks the extreme valuations seen 25 years ago. However, concluding that this means risks are low is dangerously complacent. The fact that markets have not yet reached the extremes of one of history’s largest bubbles does not mean that current risks are insignificant.

By late October, concerns began to surface more prominently in market commentary. Growing unease about the scale of investment flowing into AI technologies and infrastructure contributed to a pullback in global equities. The correction proved brief, and major indices have since recovered from the shake-out. Even so, we remain cautious around pockets of speculation and froth across parts of global markets.

This is why diversification—spreading investments across sectors and themes—remains essential. Avoid being swept up in the hype that often accompanies major technological breakthroughs and instead stay focused on sustainable business models and resilient earnings.

Global equity market performance in 2025 (index = 100 on 1 Jan 2025) 

Source: Refinitiv, Forsyth Barr analysis

NZ economy turning the corner

After a tough few years, signs of an economic recovery are becoming more evident in New Zealand.

The export sector has been a steady source of strength over the past year, with both agricultural and horticultural products generally performing well, supported by firm global commodity prices.

Fonterra delivered a record NZ$10.16 per kilogram of milk solids (kgms) in the 2024/25 season and is forecasting a still-strong NZ$9.50/kgms for the current season. Farmers have initially used the additional income to reduce debt, but with another strong year expected—and a windfall payment from Fonterra’s consumer business sale—more of that cash is likely to filter through to local communities. Tourism has also recovered, with international arrivals back to around 90% of pre-COVID levels, although the rebound has been slower than in some comparable countries.

In contrast, conditions in Auckland and Wellington have been more subdued. Weaker construction activity, softer housing markets, and low consumer confidence have kept growth muted. The housing market has been particularly influential, as falling prices tend to erode confidence and dampen household spending.

Against this backdrop, interest rates have continued to fall. The Reserve Bank of New Zealand (RBNZ) cut the Official Cash Rate (OCR) by 50 basis points in October and a further 25 basis points in November, bringing the OCR down to 2.25%.

More recently, signs of broader improvement have emerged, with business and consumer confidence lifting, retail sales strengthening, and the labour market showing signs of stabilisation. If this recovery continues to firm, the RBNZ expects to keep interest rates unchanged for a period to allow the economy to consolidate. Barring major economic or financial shocks, the OCR is likely to remain on hold at the current level until at least the end of 2026.

Falling interest rates have eased borrowing costs for mortgages and business loans, providing welcome relief for households and firms facing elevated repayment pressures. However, the shift in rates has also affected savers, with returns on cash and term deposits continuing to decline. With interest rates moving, now may be a good time to review where your savings are held—and consider whether other options could offer a better balance of risk and return.

RBNZ Official Cash Rate and six-month term deposit rate (%)

Source: RBNZ, Bloomberg, Forsyth Barr analysis

Better times ahead for NZ equities

New Zealand’s recent reporting season gave further hints of the cyclical recovery taking hold. Company updates across several domestically exposed sectors point to improving trading conditions.

There is also increasing appeal in NZ’s defensive profile of high-quality, dividend-paying companies, particularly as interest rates remain low. Yield-oriented sectors such as infrastructure and property continue to offer comparatively robust income streams, some with the prospect of steady dividend growth.

Don't chase the hype

Over the past year, your investment portfolio has likely featured both standout performers and underwhelming laggards—that’s entirely expected. The very purpose of diversification is to ensure that different investments excel under different conditions. It can be tempting to chase the sectors dominating the headlines, but FOMO (‘fear of missing out’) is rarely a sound investment strategy. By the time a theme has become front-page news, much of the easy money has usually been made and it now may even be overhyped.

Instead, stay focused on your own goals, time horizon, and risk tolerance. A diversified, disciplined approach—reviewed occasionally, not constantly—has historically worked better than chasing short-term hype. Remember: past performance is no guarantee of future results.

Matt Henry
Head of Wealth Management Research

Zoe Wallis
Investment Strategist 

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