Market update – Quarter ended 31 December 2025

Market update (October - December 2025).

Global markets ended 2025 positively with most major share markets delivering gains for the quarter and reaching new highs. This was despite ups and downs caused by shifting interest rate expectations and ongoing geopolitical events. Let’s take a closer look at the markets here and around the world.

Global

• US equities^[1] rose for a third consecutive quarter gaining 2.4%. This was largely driven by strong corporate earnings, especially in technology and healthcare, and two interest rate cuts by the US Federal Reserve. However, the job market softened, consumer spending slowed and concerns about the amount of money being invested in AI increased. Well-known technology names like Meta and Microsoft also experienced a fall in their share prices.
• European equities^[2] reached new highs gaining 6.1%. This was supported by strong company earnings and improved investor confidence, despite occasional market jitters from political events. 

In New Zealand

The NZ share market^[3] rose 1.9% over the quarter. The economy showed signs of recovery and the Reserve Bank of New Zealand cut interest rates twice. However, it signalled that further cuts are unlikely in 2026. 

Bonds & Currency

Bond markets were mixed as expectations shifted from more rate cuts to a likely pause. US Treasury yields were mostly steady, while New Zealand’s 10-year government bond yield rose slightly. The New Zealand dollar strengthened against the US dollar late in the quarter, but not quite enough to fully recover from earlier weakness.

What this means

• Businesses: Lower interest rates can make borrowing cheaper and help exporters, but global uncertainty and mixed domestic growth may slow business investment.
• Consumers: Easing inflation and lower interest rates may provide some relief, but a softer job market could limit household spending and confidence.
• Investors: While new technology trends and strong overseas markets are encouraging, it’s a good time to check your investment fund choice still matches your goals and comfort with risk.

Looking ahead 

Recent quarters have brought both gains and volatility. Short-term ups and downs are a normal part of investing and diversification can help smooth the ride. For long-term investors, staying in the right fund, aligned with your goals, increases the likelihood of growth over time.

^{[1] S&P 500 Index (in USD)}

^{[2] STOXX Europe 600 Price Index (in Euros)}

^{[3] S&P/NZX 50 Total Return Index (in NZD)}