Market Commentary
December market commentary
In the US, markets were buoyed by a 0.25% Fed rate cut. However, diverging member views and elevated uncertainty left the future path of rates unclear. Consumer prices came in soft at 2.7% raising confidence the Fed may be on top of inflation.
Tech sentiment wavered in December after Oracle reported softer cloud computing sales and signalled plans to significantly increase AI investment. This prompted concerns about an AI bubble and triggered a tech-led pullback. In another tech development, Netflix announced it is pursuing the acquisition of Warner Bros. Discovery (and yes, this may mean more content coming to your Netflix subscription).
Here at home in NZ, we welcomed Anna Breman as our new Governor of the Reserve Bank. It wasn’t a quiet start with the Bank announcing a relaxation of capital requirements and Breman highlighting risks around a sharp rise in market interest rates. GDP for the September quarter rose 1.1%, offering a welcome lift in economic sentiment.
Meanwhile, the New Zealand Treasury’s Half Year Economic and Fiscal Update extended the timeline for the Government’s return to surplus by another year. As New Zealand heads into an election year, political signals are becoming increasingly relevant.
Across the Tasman, Australian GDP grew 0.4% in Q3, undershooting expectations. The RBA maintained a hawkish stance, holding the cash rate at 3.6% and reiterating that inflation risks remain skewed to the upside. Despite this, equity markets held up reasonably well, though consumer confidence stayed subdued.
Against this backdrop, the S&P 500 finished the month broadly flat. The tech-heavy NASDAQ slipped -0.5% amid tech volatility. The FTSE 100 outperformed, rising 2.2% as UK inflation surprised to the downside and the Bank of England cut rates. Closer to home, the NZX 50 and ASX 200 returned 0.4% and 1.2% respectively.
GBP and AUD / NZD exchange rate change from 30 November 2025 to 31 December 2025:
GBP and AUD / NZD exchange rate change from 31 December 2024 to 31 December 2025:
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