Selected Market Indicators for Periods to 31 January 2024

In 2024, the share market had a strong start, with equities (shares) continuing to rise in value. However, fixed income assets (such as bonds) struggled to keep up. US shares performed better than both developed and emerging market shares. The share market in New Zealand (S&P/NZX 50) returned 0.9% for the month. In Australia, the S&P/ASX 200 index increased by 1.2% (in Australian dollars).

One of the key things impacting investor sentiment globally is inflation, which is the increase in prices over time, as well as hopes of interest rate cuts.

  • In the US, Consumer Price Index (CPI) rose to 3.4% from 3.1%, mainly due to higher housing costs.
  • In the Eurozone, annual inflation also rose to 2.9%, from 2.4%, as governments reduced subsidies on energy and food.
  • Inflation in the UK ticked up to 4%, with services CPI increasing to 6.4%.
  • In Australia, fourth-quarter inflation was lower than expected, with annual CPI coming in at 4.1%, below the Reserve Bank of Australia forecasts of 4.3%.
  • In New Zealand, the CPI data for the fourth quarter was in line with market expectations and below the Reserve Bank of New Zealand's expectations by -0.3%. This data did not significantly impact the RBNZ's stance on inflation, and instead reinforced their commitment to maintaining their current course of action.

Significant developments for January:

  • The S&P 500 advanced to record highs in January rising 1.7% while the NASDAQ climbed 1.0%, largely driven by large caps, which are companies that have a market value greater than $10 billion (e.g. increases in the value of shares in the “magnificent seven”, including Apple and Microsoft).  Small caps, which are companies that have a market value of less than $2 billion, underperformed this month with the MSCI World Small Caps Index (local currency) declining -1.9%.
  • On the geopolitical front, the conflicts in the Middle East continued to escalate but with limited market impact so far. WTI Crude Oil rose 6.1% from a low base, appearing to be driven by supply disruptions due to US winter weather, and investors anticipating more economic resilience than expected.
  • In New Zealand, Q4 CPI came in line with market expectations at 0.5% q/q bringing annual inflation down to 4.7% over the year. The softer inflation print along with Q3 GDP contraction was largely dismissed by Reserve Bank of New Zealand chief economist at a recent speech pushing back on markets expectations of near-term rate cuts.
This information has been prepared by Mercer (N.Z.) Limited for general information only. The information does not take into account your personal objectives, financial situation or needs.

28 February 2024