Market & Portfolio Update - August 2024

Global share markets witnessed a bout of volatility early in the month, driven predominantly by weaker-than-expected US employment data and the Japanese central bank raising interest rates by 0.25%. Japan’s share market fell -12% in a day as a result, its largest single-day fall since the Black Monday crash of 1987. Global share markets, represented by the MSCI World Index, also shared in the volatility, but to a much lesser degree. The second half of the month saw Global share markets stage a strong comeback as investors digested the release of more favourable economic data; the MSCI World Index ended the month up almost 2% in local currency terms, while Japan’s share market ended the month down only -0.7%. 
     
Back home, while investors largely expected the Reserve Bank of New Zealand (RBNZ) to cut the OCR by 0.25% during the month, the market was surprised by the RBNZ’s consideration of a more significant 0.5% cut. The market welcomed this as an acknowledgment of the RBNZ’s pivot and reaction to the country’s weakening economic conditions.   
     
Within the New Zealand share market, healthcare and property sectors had a particularly strong month. These sectors tend to be more rate-sensitive and reacted positively to the OCR cut. NZ’s largest listed company, Fisher & Paykel, also performed strongly, ending up +10% following a positive trading update citing strong demand across all products and regions.