Market update: Treading water
Over the past couple of months, global markets have felt like they are treading water. Slowing growth, geopolitical tensions, and changing monetary policies have all weighed on sentiment. Yet, at the same time, resilient company earnings and expectations of interest rate cuts have helped keep volatility in check.
Here’s a look at what’s been happening around the world.
United States
The U.S. labour market is beginning to show signs of fatigue, with unemployment rising to 4.3%, the highest in almost four years, and wage growth cooling. This has increased speculation that the Federal Reserve may move to cut rates in the coming months.
Despite these headwinds, American sharemarkets remain strong. In early September, all three major indices; the S&P 500, Nasdaq, and Dow Jones, reached record highs. Much of the optimism stems from the ongoing wave of investment in artificial intelligence, combined with hopes of lower borrowing costs ahead.
Trade tensions with China continue, particularly around rare-earth exports, though Australia is stepping up as a potential alternative supplier.
Europe
The European Central Bank kept rates on hold through July, following an earlier cut in April. Inflation has stabilised near 2%, and policymakers are taking a cautious, wait-and-see approach as Europe adapts to shifting global trade dynamics.
China
China continues to grapple with weak demand. Consumer prices slipped in the year to August, and producer prices continued to stay negative. The property sector remains under pressure with sales well down on last year.
In response, Beijing has announced measures to stimulate activity, including cheaper business loans and increased credit support. Even so, confidence among households and businesses is proving slow to recover.
Middle East
The United Arab Emirates is positioning itself as a new global centre for artificial intelligence. With plans to build one of the largest AI training facilities outside the U.S. and supported by Nvidia’s advanced chips, the UAE is looking to diversify its economy beyond oil and position itself at the heart of the next industrial revolution.
Australia
In August, the Reserve Bank of Australia cut rates for the third time this year, taking the cash rate down to 3.60%. This reflects easing inflation and weaker household spending.
At the same time, Australia has committed significant investment to rare-earth production, positioning itself to rival China and provide Western economies with alternative supply chains. However, new capacity is still a couple of years away, so rare-earth tensions remain unresolved for now.
New Zealand
Here at home, the Reserve Bank reduced the Official Cash Rate to 3.0% on 20 August, the lowest in three years, citing subdued growth and softer inflation.
The housing market has shown tentative signs of recovery, with sales volumes picking up through winter, although prices remain below their 2021–2022 peaks.
Outlook: cautious optimism
While the global picture is mixed, there are a few important points to keep in mind:
- Staying diversified across regions and sectors helps manage risk.
- Keep a long-term perspective rather than reacting to headlines.
- Well-spread portfolios are designed to ride out short-term fluctuations.
Talk to us
Every investor’s situation is unique. If you would like to discuss how these developments may affect your own financial plans, please get in touch with NZBritannia. Our advisers are here to help you stay on track and make confident decisions about your future.
The information contained in this publication is intended for general guidance and information only. It has not been personally prepared for you. Therefore, you should not act on this information if you have not considered the appropriateness of this information to your personal objectives, financial situation and needs. You should consult with us before making any investment decision. Historical market performance may not be indicative of future market performance.