Market Update August 2022

 By Chelsea Traver at Evergreen Advice 

Investment markets continue to be driven by inflation prints and how resulting words and actions of central banks. In July markets rose on expectations that central banks will not raise interest rates as high as anticipated. During August central banks around the world pushed back on this idea and reiterated that interest rates will stay higher for longer to battle continued inflation. As a result, global share markets fell and interest rates moved higher which led to another tough month for bond investors.

The REINZ House Price Index for New Zealand, showed an annual decrease of 5.8 per cent. The index is now down 12 per cent from its peak last November. The falls in Wellington and Auckland have been particularly large with Wellington showing a decrease of 21.6%. The average house price went from $995,000 in February 2022 to $780,000 this month. These are the greatest six-month drops each has experienced since REINZ records began in 1992.

Overall inflation is still the driver of market performance as it has been for the majority of the year.