A quarter pulled two ways

Strong company earnings kept pushing share markets higher, while rising interest rates pulled bonds, listed property and infrastructure lower. For most diversified investors the result was a broadly flat quarter, sitting on top of a solid year.

29 October 2026

The quarter at a glance

Returns to 30 September 2026, % in New Zealand dollars, before tax. Source: Māpua Research quarterly monitoring report (Morningstar data).

Over the quarter, global shares were the best performer and global listed infrastructure the weakest. Over the year, emerging market shares led the way, while global fixed income was the only asset class to fall.

Shares: earnings did the heavy lifting

Global shares kept climbing on the back of very strong company earnings, which grew at an annualised rate of over 30%. Gains in the quarter leaned heavily on large US technology companies. Over the year, though, they were spread more broadly, with shares outside the US and “value” companies doing slightly better than the wider market.

Emerging markets were the stand-out over the year. They rose only slightly in the September quarter, but this followed a very strong June quarter. That left them up roughly double the return of global shares over 12 months.

New Zealand and Australian shares lagged. Higher local borrowing costs are weighing more heavily here than offshore. New Zealand shares rose modestly despite a generally good company reporting season. Australian shares did better in New Zealand dollar terms than in Australian dollar terms. Rising Australian interest rates are starting to affect the housing market there, and with it the large banks that dominate that share market.

Bonds, property and infrastructure: a rate-driven setback

Investments that are sensitive to interest rates had a difficult quarter. When long-term interest rates rise, the value of existing bonds falls. Both New Zealand and global bonds gave back the gains they made in the June quarter.

The main driver was renewed concern about inflation. Earlier in the year there was hope that the conflict in Iran was winding down. Instead it resumed, pushing oil prices higher, with Brent crude above US$100 a barrel when our research provider, Māpua Research, wrote its report. Higher fuel prices add to inflation. The Reserve Bank of New Zealand raised the Official Cash Rate twice during the quarter, to 2.75% in September, and held it there at its 28 October review. Other central banks are also expected to keep raising rates. Listed global property and infrastructure felt this most, reversing their gains from the previous quarter.

What this means for you

This quarter is a good example of why diversification matters. Shares and bonds moved in opposite directions, so a mix of both smoothed the ride. Bonds held back returns this quarter, while shares carried the gains.

Short-term movements like these are normal. They are already allowed for in the long-term plan we built with you, based on your goals, timeframe and comfort with risk. We continue to monitor the fund managers in your portfolio each quarter with our research provider.

If your circumstances have changed, or you would like to talk through your portfolio, please get in touch with us. You can call us on 06 834 0974 or 0800 340 974, or email office@fahb.co.nz. We are always happy to hear from you.

Important information

This update is general information only. It is not personalised financial advice and does not take into account your particular circumstances or goals. Please speak with your adviser before making any investment decisions. Past performance is not a reliable indicator of future returns.

Market returns are sourced from Māpua Research’s quarterly monitoring report as at 30 September 2026 (data from Morningstar). Returns are in New Zealand dollars and before tax. Conditions may have changed since that date.

Financial Advice Hawke’s Bay Limited is a licensed Financial Advice Provider, FSP110362. A copy of our disclosure information is available free of charge on request.