Selected Market Indicators for Periods to 31 January 2023

Global share markets started the New Year with a bang, showcasing a strong rally off the back of a weak December. Market sentiment has improved from its largely pessimistic outlook, driven by the belief that inflation has peaked. This was supported by a positive downward shift in US Consumer Price Index (“CPI”) data, which was 6.5% year-on-year (y/y) in December (down from 7.1% in November). This again raised hopes that the US Federal Reserve (“Fed”) would slow its monetary policy tightening campaign. January also saw further progress in China’s economic reopening, where investors are taking a positive view of Chinese assets. In a month of strong market performance, investors will be cautiously optimistic for the coming year.

Global Share Markets rebounded from a disappointing year end, as most major markets posted strong positive returns. As has been the January theme, peaking inflation and more positive messaging from central banks have been the main market drivers, as investors begin to take on a more optimistic outlook. Elsewhere, Chinese equities look strong, as investors return to China after a “zero-Covid exodus”.

Listed property markets bounced back with a hiss and a roar in January, as they benefitted from more upbeat market sentiment. With the pace of interest rate hikes expected to slow, the investment outlook for the sector is becoming increasingly attractive to investors. Listed infrastructure also fared well, trending upwards along with the broader market.

The NZD had mixed performance against most major currencies. The NZD was up 2.2% against the USD, as the USD continued to weaken against most major currencies. Propped up by a softening relationship with a rising China, the AUD went from strength to strength to start the year, with the NZD ultimately finishing the month down -1.7% against the Australian dollar.

Significant developments for January included:

• US inflation numbers have dropped for the sixth consecutive month, with the CPI coming in at 6.5% y/y in December. Fed Chair, Jerome Powell, has continued to state that interest rates will remain high through 2023 to avoid ‘under-cooking’ the inflation fight.
• Gautam Adani, the world’s fourth richest man, had his net worth halved in the face of accusations from Hindenburg Research that he has pulled off “the largest con in corporate history”. The accusations include stock manipulation, unsustainable debt, and tax havens, causing the Adani Group to lose over $110 billion in market value.
• After nearly 6 years as Prime Minster of New Zealand, Jacinda Ardern announced her intention to resign from the position. She also announced that New Zealand’s next general election would be on the 23^rd of October. She has been replaced by Chris Hipkins as leader of the Labour Party and Prime Minister of New Zealand.