Market Update November 2021

 By Mike Ross at Evergreen Advice

Global

Global share markets started out the month well, supported by economic data releases showing a strong economy. However, they faltered in late November with the emergence of Omicron, the new Covid-19 variant, and the growing expectation that the US Federal Reserve will look to increase interest rates more quickly than previously assumed in reaction to high inflation. Post month-end, inflation estimates were confirmed when US annual inflation was reported at 6.8%, the highest increase since 1982.

Even with the downturn late in November, NZ investors in global shares returned a positive 3.2% for the month due to currency movements, and 26.7% over the past year.

New Zealand

In contrast, the NZ share market had another challenging month, down 2.9%, with a number of companies delivering disappointing results. The NZ market now has a marginally negative return (-0.4%) over the past year. The main bright spot in the NZ market was the performance of Fisher & Paykel Healthcare (who make respirators used to help treat serious cases of Covid-19) due to the emergence of the omicron variant. Ryman Healthcare (-14.9%) and Pushpay (-28.4%) fell after reporting disappointing earnings results.

In fixed interest markets, the RBNZ lifted the official cash rate another 0.25% to 0.75%. However, they signalled less aggressive rate rises than the market was expecting and so overall interest rates fell, resulting in positive returns for bonds investors.