Market Update Q3 2024

Markets remained resilient through the third quarter of 2024, despite ongoing geopolitical concerns and uncertainty about the global economy.

Central banks, including the US Federal Reserve and Reserve Bank of New Zealand, began easing interest rates—a clear signal that the tide may be turning after several years of tight monetary policy.

In the US, a long-awaited 0.50% rate cut was introduced in September, with New Zealand following suit by lowering the OCR to 4.75%. Inflation in NZ is now within the target range, but economic growth remains subdued. While rate cuts are positive news for borrowers, investors are reminded not to be lured into holding too much cash—historically a lower-performing long-term asset class.

Diversification remains key. Despite a sharp one-day fall in Japan’s Nikkei Index in August, markets rebounded quickly, reinforcing the importance of staying invested. The quarter also saw strength across global share markets, with emerging markets outperforming developed nations—driven largely by stimulus in China and solid gains in India and Brazil.

NZ’s share market delivered solid returns, buoyed by corporate activity, RBNZ rate cuts, and standout performances from companies like Arvida and A2 Milk. Australian and international fixed interest markets also had strong quarters as yields fell in response to rate cuts.

Finally, our light-hearted take on forecasting reminds us not to place too much weight on headlines—or the Warriors’ NRL performance—when making long-term investment decisions. As Nobel laureate Paul Samuelson said, “Investing should be more like watching paint dry.” In other words, boring is often brilliant when it comes to wealth building.