Market Update March 2023

Markets rallied during the second half of March to deliver solid overall returns for the month and complete a strong quarter to start the year. Shares recovered supported by initial evidence that a potential banking crisis had been contained to a small number of banks, and further evidence of slowing in inflation.

Global shares returned 2.2% and are now up +9.0% year-to-date. Performance has been driven by a recovery in major technology businesses such as Apple, Facebook, and Telsa which fell significantly in 2022 but have since rebounded strongly. The NZ share market was marginally negative during the month but has still achieved a healthy return of 3.6% year-to-date.

Bonds also had a strong month with NZ (+2.0%) and global bonds (+2.2%) both up. There is a growing consensus that central banks have almost ended their tightening cycles (official cash rate increases) as evidence strengthens that global inflation is slowing. Even in New Zealand, where the Reserve Bank increased the official cash rate by 0.5% last week, longer-term interest rates (including mortgage rates) have held firm or fallen based on the belief that the RBNZ will have to reduce rates relatively quickly to support a slowing economy.

The last quarter is a good reminder that is best to ignore headlines, and instead stay invested and stick to your long-term plan.