Selected Market Indicators for Periods to 30 November 2022

Global share markets continued to deliver positive returns in November, which was a result of better than expected Consumer Price Index (‘CPI’) readings in the US, spurring the S&P 500’s biggest one-day rally since April 2020. In spite of this, the US Federal Reserve (‘Fed’) remained intent on increasing interest rates further. This view was shared by St. Louis Fed President, James Bullard, who stated that a 5% - 5.25% target policy rate was needed “at the very minimum”, well above the current range of 3.75% – 4%. Despite back-to-back monthly gains in global share markets, the economic outlook remains unclear. Market participants and central bankers will continue to monitor employment data closely as interest rate rises continue to filter through and weigh on the global economy.

New Zealand shares also continued to perform well during the month, reflecting a generally positive market mood globally. The S&P/NZX 50 finished the month up 1.9%. Comparatively, Australian shares took flight, gaining 6.6% (in local currency). This was a result of CPI coming in much lower than expected and the Reserve Bank of Australia’s rate hike of 0.25%, which further demonstrated their less aggressive monetary policy stance in comparison to global counterparts.

In keeping with the wider market movements, Listed Property gained 4.9%. This was aided by a sharp rise in Chinese real estate stocks, after the Chinese Government announced a debt easing policy for the sector. Listed Infrastructure also fared well, rising 6.0%.

Significant developments for November included:

• The US midterms did not result in the “giant red wave” that many pollsters had predicted. Whilst the Democrats will hold a slight majority in the Senate, the House of Representatives has a Republican majority. This is a blow to the Biden Administration, with the gridlock caused by a split Congress likely to hinder the introduction of any Democratic policies.
• Mass protests broke out in China over the country’s zero-Covid policy, with at least 15 major cities holding major demonstrations, including Beijing and Shanghai. Locals welcomed a relaxation of some restrictions after public unrest reached a boiling point amid record high Covid cases and increasingly costly lockdowns. 
• The Reserve Bank of New Zealand (‘RBNZ’) delivered an Official Cash Rate (‘OCR’) rise of 0.75%, the biggest single rise since the OCR was established in 1999. This hawkish approach was accompanied by the news that there was consideration of raising it by a full percentage point. The RBNZ also forecasted a “shallow recession”, which they predicted to last through next year.