Market Update July 2026

Global Share Markets

Global share markets were mixed in July, with currency movements having a significant impact on returns for New Zealand investors. Global shares hedged to the New Zealand dollar were broadly flat, returning 0.1%, while unhedged global shares fell 3.1%. This difference largely reflected the New Zealand dollar strengthening by 2.3% against the US dollar during the month. Despite July’s weakness, global shares have delivered strong gains over the past year, returning more than 20%.

US technology shares remained an important market driver, with the S&P 500 technology sector falling -3.6%. Beneath this headline number, there was a wide gap between individual companies. Strong earnings from some of the largest technology businesses, including Microsoft, supported the sector, while a number of semiconductor and AI-related shares fell sharply as investors reassessed elevated valuations and the very high level of spending required to develop AI infrastructure. SpaceX was a notable example, falling by approximately one-third during the month and finishing below its June issue price.

Emerging-market shares were the weakest major segment, falling 6.1%. South Korea was particularly weak, with its market falling approximately 22% after an earlier AI-driven surge. Semiconductor giants Samsung Electronics and SK Hynix declined sharply as investors questioned elevated valuations, AI infrastructure spending and increasing competition from Chinese chipmakers. Despite July’s reversal, emerging-market shares remain up 37.7% over the past year.

New Zealand Share Market

Closer to home, the New Zealand share market was relatively resilient, gaining 0.6% in July. Fisher & Paykel Healthcare remained supported by its strong annual result, which included 14% revenue growth and a 24% increase in profit. Infratil continued to attract interest because of the growth of its CDC data-centre investment and One NZ, while a2 Milk also remained one of the stronger-performing larger companies over the past year. Conversely, Mainfreight and Fletcher Building continued to face a more subdued economic backdrop. Higher bond yields also weighed on interest-rate-sensitive companies, including listed property businesses such as Goodman Property Trust and Precinct Properties. This contributed to the listed property index falling 0.9% in July and remaining slightly negative over the past year.

Fixed Interest

Fixed interest investments also had a difficult month, with New Zealand bonds falling 1.2% and global bonds declining 1.1%. Bond yields rose as investors became less confident that central banks would be able to reduce interest rates as quickly as previously expected. Higher energy prices added to inflation concerns, while resilient economic data and high levels of government borrowing also placed upward pressure on longer-term yields. Because existing bond prices fall when market yields rise, this resulted in negative returns during July. However, the higher yields now available should support better income returns going forward, and bonds continue to provide an important source of portfolio diversification.

Overall, markets have generated healthy gains over the past year, but July was a useful reminder that returns rarely arrive in a straight line. Equity valuations remain elevated in some areas, while inflation, interest rates, geopolitical developments and the sustainability of AI-related investment remain important sources of uncertainty.