What’s happening in the markets?

Quarter ended 30 June 2022

The June quarter was characterised by sharp declines and intense volatility across both bonds and equities, with cash the only asset class to deliver a positive return. It is rare for both shares and bonds to experience such declines at the same time.

Global equities returned -14.3% (local currency returns) over the June quarter (following a March quarter return of -4.6%). US equities posted their worst first half performance since 1970 with a return of -20% with most of the decline in the June quarter (-16.1%), European equities and Emerging markets returned -9.9% and -11.4% respectively over the quarter. UK and Japanese equities both returned close to -3.7% over the quarter. NZ equities returned -10.3%, slightly outperforming Australian equities, which returned -11.9% over the quarter. China and Hong Kong were the top performing equity markets with flat to slightly negative returns. At a sector level, interest rate sensitive growth sectors such as Consumer Discretionary (-22%) and Information Technology (-21.1%) were the top laggards over the quarter. While all sectors posted negative returns over the quarter, Energy led with a return of -2.7%. Value stocks continued to outperform growth in Q2 of this calendar year.

Fixed interest bonds also declined over the quarter but outperformed equities. The global bond market had another difficult quarter ending June with a return of -4.5% following its worst quarterly return in March (-4.8%), making the year-to-date drawdown the worst on record. NZ bonds outperformed global bonds and returned -2.4% for the June quarter.

Commodities had their strongest start to a calendar year ever in the March quarter, however started to fizzle in mid-June on fears of deteriorating demand with Bloomberg's Commodity Spot Index returning -5.7% in the June quarter on the back of a slump in industrial and precious metals. Oil prices were up 5.5% over the June quarter closing at US$105.8 per barrel, although at one stage they reached a high of US$122.1. The NZ dollar fell over the June quarter: -10.6% vs the US dollar, -5.3% on a trade-weighted basis and -2.4% vs the AU dollar.

Investment performance as at 30 June 2022 after fees and tax.

Returns are based on unit prices (determined by Mercer) for the respective funds.

^{*Commenced in December 2012, so data not available for the 10-year period.}