Key market movements - September 2026

International shares

+1.5% (MSCI World ex Australia Index, net dividends, hedged to NZD)

+2.7% (MSCI World ex Australia Index, net dividends, unhedged)

Developed market shares delivered a modestly positive result over the quarter, with the MSCI World ex Australia Index returning 1.5% on a hedged basis and 2.7% unhedged. A resilient macroeconomic backdrop and strong earnings growth outweighed concerns around geopolitics and tighter monetary policy.

A buoyant earnings cycle in technology and energy, and to a lesser extent banking, supported markets. Market performance was strongest in July and August before softer conditions emerged in September as oil prices climbed and central banks raised interest rates.

In the US, the S&P 500 Index reached several record highs during the quarter. Technology companies regained momentum following July's semiconductor-led sell-off, while software companies also benefited from strong earnings. Rising precious and industrial metal prices led to gains in resource companies.

The AI investment cycle remained the dominant market theme. NVIDIA's late August result capped an exceptionally strong US earnings season, with profit and revenue both more than doubling year-on-year. Importantly, earnings growth was broad-based, with most S&P 500 sectors reporting year-on-year growth.

Japanese shares were among the strongest performers. Semiconductor companies, exporters and cyclicals contributed positively, aided by improving business confidence.

European shares lagged global peers as investors questioned the sustainability of earnings growth and focused on the impact of rising interest rates. While fiscal support for defence and infrastructure remained favourable, investors preferred regions with greater exposure to AI-related investment themes. The European Central Bank (ECB) raised its deposit rate to 2.5% and markets priced in further tightening.

Source: MSCI World ex Australia Index (net div.)

Emerging markets shares

+0.4% (MSCI Emerging Markets Index, net dividends, unhedged NZD)

Emerging market shares declined slightly during the quarter, returning -0.4% in US dollar terms, although returns to unhedged New Zealand investors were positive due to a slightly weaker New Zealand dollar over the quarter. 

The subdued performance of this quarter stood in contrast to the strong gains recorded during the first half of 2026.

The asset class was affected by the global semiconductor sell-off, a stronger US dollar, rising US Treasury yields and higher energy prices. However, performance varied significantly across regions.

China was a positive contributor overall, despite the MSCI China Index declining -4.6% in September. Technology-focused indices fell sharply in September as investors reassessed AI-related valuations and remained concerned about weak domestic demand. Structural challenges, including weakness in the property sector and subdued consumer spending, continued to undermine confidence.

Taiwan continued its incredible year, supported by strong demand for semiconductors. Taiwan Semiconductor Manufacturing (TSMC) reported August revenue growth of +53% year-on-year, reinforcing confidence in the ongoing AI investment cycle.

South Korean shares experienced volatility but recovered from the semiconductor-led sell-off in July. Indian shares faced pressure from elevated valuations and concerns over future earnings growth. Across Latin America, higher commodity prices provided support, although currency movements reduced gains for unhedged investors.

Overall, emerging markets spent the quarter consolidating after a strong first half while absorbing the combined effects of higher US yields, dollar strength and geopolitical uncertainty.

Source: MSCI Emerging Markets Index (net div.)

New Zealand shares

+1.9% (S&P/NZX 50 Index, gross with imputation)

The New Zealand share market generated a positive return of 1.9% during the quarter, although market conditions deteriorated significantly in September.

The NZX 50 Index declined -0.4% during September as higher oil prices, rising global bond yields and a domestic interest rate increase weighed on sentiment. Despite this weakness, gains from July and August were sufficient to produce a positive quarterly outcome.

On 2 September, the Reserve Bank of New Zealand (RBNZ) increased the Official Cash Rate (OCR) to 2.75%. Inflation had climbed to 4.1% in the June quarter, driven largely by higher fuel costs stemming from Middle East conflict. The bank indicated inflation was expected to remain above 3% for the rest of 2026 and signalled that further interest rate tightening may be required.

The interest-rate sensitivity of many NZX-listed infrastructure, utility and property companies created a direct valuation headwind as rates moved higher. Despite these conditions, Auckland Airport, Fisher & Paykel Healthcare and Meridian Energy were among the stronger performers.

Although elevated inflation and tighter monetary policy continue to put pressure on household spending, New Zealand shares performed broadly in line with international developed markets over the quarter.

Source: S&P/NZX 50 Index (Gross with Imputation)

Australian shares

+2.5% (S&P/ASX 200 Index, total return, unhedged NZD)

Australian shares delivered a positive return of 1.3% for the quarter (in AUD terms), despite a difficult finish to the period. The ASX 200 Index fell -2.4% in AUD terms in September, after recording a strong first two months. Rising oil prices and interest rates dented investor confidence, although gains during July and August preserved a positive quarterly result.

Economic growth remained resilient, with Australian GDP increasing +0.4% during the June quarter and +2.1% year-on-year. However, inflation remained persistent, forcing the Reserve Bank of Australia to increase interest rates on the last day of the quarter after holding twice through the winter.

At the sector level, financials benefited from higher interest rates, while energy stocks gained from stronger commodity prices. Technology shares were supported by ongoing AI-related investment themes. Healthcare and consumer discretionary sectors faced headwinds from rising bond yields and cautious household spending.

Resources and selected healthcare and technology companies continued to receive support from strong earnings growth, while domestically focused businesses struggled with slower housing activity, weaker consumer demand and higher financing costs.

Returns to unhedged New Zealand investors were improved due to a slightly weaker New Zealand dollar over the quarter.

Source: S&P/ASX 200 Index (Total Return)

International fixed interest

-0.9% (FTSE World Government Bond Index 1–5 Years, hedged to NZD)

-2.9% (Bloomberg Global Aggregate Bond Index, hedged to NZD)

Global bond markets endured a challenging quarter as inflation concerns and tighter monetary policy drove yields higher.

The shorter-duration FTSE World Government Bond Index declined -0.9%, while the broader Bloomberg Global Aggregate Bond Index fell -2.9%, reflecting the greater sensitivity of longer-duration bonds to rising yields.

A resurgence in energy prices was a key catalyst. Brent crude oil remained above US$100 per barrel for much of September, while European gas prices rose steadily. Although core inflation remained relatively contained, rising energy costs pushed headline inflation higher and prompted central banks to continue tightening policy.

In the US, the Federal Reserve raised interest rates by +0.25% to a target range of 3.75%-4.00%. The US 10-year Treasury yield rose from 4.42% to 5.29% during the quarter, while the 30-year Treasury yield finished at 5.64%, its highest level in more than 15 years.

European bond markets also weakened. The ECB increased rates to 2.5%, while concerns surrounding fiscal deficits and government borrowing placed pressure on sovereign debt markets. French government bonds underperformed, and spreads relative to German Bunds widened meaningfully. UK bond yields climbed to levels not seen since 2007.

Japan also joined the tightening cycle, with the Bank of Japan raising rates to 1.25% and the 10-year Japanese government bond yield reaching 3% for the first time since 1996.

Investment-grade credit generated negative returns due to rising yields. High-yield bonds performed relatively better because of shorter duration and still solid underlying corporate fundamentals.

Source: FTSE World Government Bond Index 1-5 Years (hedged to NZD), Bloomberg Global Aggregate Bond Index, hedged to NZD

New Zealand fixed interest

-1.1% (S&P/NZX A-Grade Corporate Bond Index)

New Zealand fixed interest markets recorded negative returns during the quarter, with the S&P/NZX A-Grade Corporate Bond Index declining -1.1%.

Bond yields rose in response to the RBNZ's September interest rate increase and the broader global bond market sell-off. In contrast, cash continued to deliver positive returns, with the NZ One-Month Bank Bill Yields Index returning 0.7% for the quarter.

The RBNZ raised the OCR by +0.25% in both July and September, to a level of 2.75%, citing inflation of 4.1% and the inflationary impact of higher fuel costs. The bank warned inflation would remain above target for the remainder of 2026 and indicated further tightening may be necessary.

New Zealand government bonds declined during September, while lower-rated corporate bonds also struggled. Rising yields reduced bond returns by more than any positive offsetting interest income across much of the market.

Although the domestic economy continued to recover, the RBNZ faced a difficult policy trade-off. Inflation was being driven largely by higher energy prices rather than excessive domestic demand, meaning tighter monetary policy risked further pressure on households and businesses already facing elevated living costs.

Source: S&P/NZX A-Grade Corporate Bond Index

 

Table 1: Asset class returns to 30 September2026

Asset class	Index name	3 months	1 year	3 years	5 years	10 years
International shares	MSCI World ex Australia Index (net div., hedged to NZD)	+1.5%	+14.7%	+20.4%	+11.8%	+12.8%
	MSCI World ex Australia Index (net div.)	+2.7%	+18.7%	+24.1%	+16.6%	+15.8%
Emerging markets shares	MSCI Emerging Markets Index (gross div.)	+0.4%	+33.0%	+26.7%	+13.5%	+11.9%
New Zealand shares	S&P/NZX 50 Index (gross with imputation credits)	+1.9%	+4.8%	+7.8%	+1.6%	+7.4%
Australian shares	S&P/ASX 200 Index  (total return)	+2.5%	+10.9%	+16.7%	+11.3%	+10.8%
International fixed interest	FTSE World Government Bond Index 1-5 Years (hedged to NZD)	-0.9%	+0.2%	+3.5%	+1.4%	+1.7%
	Bloomberg Global Aggregate Bond Index (hedged to NZD)	-2.9%	-2.1%	+3.3%	-0.4%	+1.3%
New Zealand fixed interest	S&P/NZX A-Grade Corporate Bond Index	-1.1%	+1.1%	+6.1%	+2.7%	+2.9%
New Zealand cash	New Zealand One-Month Bank Bill Yields Index	+0.7%	+2.6%	+4.0%	+3.8%	+2.5%

Unless otherwise specified, all returns are expressed in NZD. We assume Australian shares and emerging markets shares are invested on an unhedged basis, and therefore reported returns from these asset classes are susceptible to movement in the value of the NZD. Index returns are before all costs and tax. Returns are annualised for time periods greater than one year.