Market Update October 2026

International shares

Global share markets declined in October as investors became more cautious about the scale, financing and likely returns from artificial-intelligence investment. Global shares fell 0.9% on a New Zealand-dollar-hedged basis and 1.4% unhedged, although they remain up 10.1% and 13.8% respectively for the year.

Weakness was concentrated among some of the largest technology companies, including Nvidia, Alphabet (Google) and Meta (Facebook), as investors scrutinised their rapidly growing spending on data centres and computing capacity. However, the wider US market was more resilient, with energy, healthcare, utilities and consumer staples performing strongly. Socially responsible global shares also held up comparatively well, declining 0.4%.

Emerging-market shares were the weakest segment, falling 7.9%. South Korea and Taiwan declined sharply because of their significant exposure to semiconductor and AI-related companies. Chinese shares were also weaker amid continued softness in domestic consumption and property investment. Despite October’s fall, emerging markets remain up 16.1% for the year.

Australasian shares

Australian shares gained 2.5% for New Zealand investors, taking their year-to-date return to 12.5%. Utilities, banks and healthcare companies led the market, while mining companies were weaker. Australia’s relatively low exposure to global technology companies helped it outperform.

The New Zealand market declined 0.3%. Infratil fell approximately 12% as investors became more cautious about data-centre valuations and AI infrastructure investment. Retirement-village companies also struggled, reflecting the subdued housing market and uncertainty over aged-care policy in the lead up to the general election. New Zealand house prices fell 0.4% during October and are down 2.3% over the past year.

New Zealand listed property rose 0.9%, although the sector remains down 11.4% over the past year.

Fixed interest

Bonds rebounded strongly, with New Zealand fixed interest gaining 1.5% and global hedged bonds returning 1.6%. Government bond yields fell as investors moved away from volatile equity markets and towards more defensive assets.

The US Federal Reserve left interest rates unchanged, while the Reserve Bank of New Zealand unexpectedly held the OCR at 2.75%. The RBNZ acknowledged that inflation remained too high but also noted subdued domestic demand and greater risks to the global outlook. These decisions reduced expectations of immediate further rate increases and supported bond prices.

October demonstrated the value of diversification. Technology-heavy and emerging share markets declined, but Australian shares, defensive global sectors and bonds produced positive returns. Investors are not necessarily losing confidence in AI’s long-term potential but are becoming more selective about which companies can generate sufficient returns to justify today’s enormous investment.