Each quarter we have an article on a financial issue we believe will interest our clients.
In addition we often post news updates and blogs on our web site at https://www.lyfords.co.nz/news-blog/
For clients who have transferred, or are looking at transferring their UK Pensions to New Zealand, updates relevant to this are posted at https://www.uk-pension-transfer.co.nz/qrops-news-blog/
In this quarter’s update we discuss:
The first quarter of the year saw a continued strong performance from many international share markets. Ongoing hype around AI technologies and the growing expectation of interest rate reductions, helped investors look past some otherwise underwhelming economic indicators in many countries, including New Zealand.
In this update, the lead article provides a brief overview of the quarter and highlights several topical themes, including the performance of Japan, a review of gold, and a closer look at the New Zealand housing market.
A more detailed summary of important asset class returns through the quarter, and over longer time horizons, is covered in the key market movements section.
In the feature article, we delve into the work of a renowned behavioural psychologist and explain why his work and insights have made an enormous contribution to the field of wealth management.
We expect 2024 will turn out to be another rewarding year, and we look forward to continuing to update you with the progress of investment markets in the coming months
Between newsletters we often post relevant blogs under the news sections on our web sites www.lyfords.co.nz and www.uk-pension-transfer.co.nz
To receive a pdf version please email us and we will email this to you. The file size is slightly outside the range permitted by the web site editor this month.
Market Commentary
Diversified investors had more reasons to smile as the markets began this year exactly as they left off last year – with another strong gain by most international share markets.
In the absence of any major new economic or geopolitical shocks, investment sentiment continued to be closely linked to changes in the inflation and interest rate landscape. On that front, the first quarter of 2024 saw another discernible shift in inflation and interest rate expectations.
Initially, markets were anticipating central banks would act relatively quickly to begin lowering interest rates this year. However, these expectations were gradually scaled back. Despite indications of inflationary pressures generally easing, a stubborn inflation reading in the US tempered the US Federal Reserve’s enthusiasm for interest rate cuts.
With inflation remaining a primary concern globally, the European Central Bank, the Bank of England, and the US Federal Reserve all proceeded with greater caution during the quarter. All were very careful to avoid making premature declarations of victory over inflation. At the same time, the Bank of Japan increased interest rates for the first time in 17 years, signalling an end to their negative interest rate settings.
Meanwhile, global economic activity was on the upswing. The US economy continued to outperform expectations, buoyed by sustained consumer spending. While the eurozone’s progress was slower, there were reasons for optimism, with manufacturing showing signs of a revival.
As the quarter progressed, government bond yields adjusted in response to shifting market sentiment. Most 10-year government bond yields increased over the quarter which reduced the returns from most sovereign bond markets.
