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Economic commentary

Markets were relatively subdued over November and into December with the exception of a short lived dip due to the events in Paris. The New Zealand share market rose alongside global markets, retuning 1.9% over the month. Global bonds were influenced by the rhetoric and expectations of central banks around the world in their respective markets. The rebound of the New Zealand dollar during October was short lived as November saw the NZD down against most of the major currencies. Expectations continue to grow for a December rate hike by the US Federal Reserve.

New Zealand Shares

The New Zealand share market rose alongside global markets, with a2 Milk leading the market forward with a 55.3% rise in November as the company lifted earnings expectations. Xero was the other high flyer over November, rallying 19.8%. The company announced its results with investors choosing to focus on an increase in revenue per subscriber rather than disappointing US subscriber growth.  After a short lived rebound of the New Zealand dollar (NZD) in October the NZD fell in November further helping New Zealand exporters which was reflected in a general increase in the share price of exporters.


The Bloomberg Commodities Index resumed its downward trend in November and into December, finishing down 7.0% for November. Commodity prices were lower across the board with the exception of some commodities in the agriculture sector. Commodities and associated share price of commodity based companies have been in decline as concerns increased over China’s growth slowdown and the elevated levels of oil inventories. Adding to the list of concerns is the expectation of a US interest rate hike which has pushed the US dollar (USD) higher. Commodities are predominantly priced in USD, so as the USD rises commodities become more expensive to international buyers.

New Zealand Bonds

Short term New Zealand government bond yields were little changed or drifted lower over the month as the expectation of further rate cuts increased. The recent price falls in the Global Dairy Trade auction together with the first signs of a slowing Auckland property market has only fuelled this expectation.

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