Market Update March 2023

April saw positive performance from share markets, with strong returns continuing in major technology stocks such Microsoft, Apple, Nvidia, Meta (Facebook) and Alphabet (Google). Year-to-date, the largest 10 stocks in the US have contributed approximately 80% of the total market return. This group of stocks had a particularly poor year in 2022 but has recovered as interest rate rises have slowed, and as they’re viewed as beneficiaries of the growth potential of AI.

The US saw inflation fall below 5% from the 9.1% peak in June 2022. The NZ inflation figure has fallen as well but is only down to 6.7% from a high of 7.3% in June 2022. Declining inflation helped support positive returns from fixed-interest investments during the month.

While the fall in inflation is good news, the US economy has showed signs of slowing over the month which was compounded by the recent banking stress. The global economy however remains in better shape than expected with Chinese and European economic growth doing surprisingly well.

In NZ, the Reserve Bank announced that they are proposing easing the limits on high loan-to-value (LVR) restrictions from 1 June. “The Reserve Bank has proposed lifting the current 10 percent limit on low deposit borrowers to 15 percent of new bank lending, from 1 June 2023. It would also allow property investors to have a slightly lower deposit”. The impact of the proposed LVR changes is good news for first-home buyers with lower deposit levels, and should provide some support to the still declining housing market