The past quarter in financial markets has been anything but dull, with developments both close to home here in New Zealand and around the globe. Here, we break down the key themes and stories making headlines
Global Markets: Tech and AI Steal the Show
Globally, share markets continued their strong run, powered by positive news from some of the world’s biggest and most influential companies. The technology sector was a particular standout, with artificial intelligence (AI) making waves and sparking both excitement and debate over whether we’re heading into “bubble” territory like we saw during the dot-com boom of the late 1990s.
A handful of tech giants — firms like Alphabet (Google’s parent company), Microsoft, Amazon, and Nvidia — have been at the centre of this activity. These companies are spending billions every year on new AI technologies, building massive data centres, and investing in faster and smarter chips. As a result, their share prices have soared, helping push the overall market higher. For example, Alphabet’s value has climbed rapidly, thanks in part to its latest advances in AI.
Still, some market watchers are asking whether this rise is sustainable. The modern twist compared to the 1990s dot-com era? Today’s tech titans are hugely profitable, with plenty of cash on hand — a stark contrast to the cash-burning start-ups of the past.
US & Global Economy: Rate Cuts and Resilience
Central banks — like the US Federal Reserve — have been in the spotlight too. With inflation showing signs of calming, the Fed has started cutting interest rates. This has boosted confidence in share markets and made borrowing cheaper for businesses and households. In the US, signs of cooling inflation, strong retail spending (helped by record-breaking Black Friday and Cyber Monday sales), and continued growth in service industries have kept the economic engine running.
Elsewhere, European, Japanese and Australian markets saw gains as well, helped by positive earnings updates and early signs that global economic growth may be picking up pace.
New Zealand: Recovery Hints on the Horizon
Back home, New Zealand’s market has delivered steady, if less dramatic, gains than places like the US. One of the quarter’s highlights was the Reserve Bank of New Zealand cutting the Official Cash Rate (OCR) to its lowest level in three years (2.25%). Lower rates are designed to stimulate the economy, and already there are “green shoots” suggesting the strategy is working.
Business confidence in New Zealand has soared to an 11-year high, job ads are rising, and retail spending has lifted for the first time in months. Sectors like construction and tourism are showing early signs of recovery, while key exporters such as dairy and meat are still benefitting from solid global demand.
Gold Shines, Silver Surprises
Beyond shares and interest rates, gold had a standout quarter, rallying as investors looked for safety and a hedge against potential drops in currency values. Interestingly, silver has outperformed even gold, thanks in part to booming demand for electric vehicles and electronics (which require a lot of silver in production).
What’s Next?
The big questions on investors’ minds now are whether the AI boom can keep delivering, and whether central banks will keep supporting economies with low interest rates. While there are always risks and talk of potential bubbles, staying diversified — spreading your investments across different sectors and countries — remains the classic approach to balancing the ups and downs. As always, the market never moves in a straight line, but keeping an eye on the big themes helps put the daily headlines in perspective.
