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Harbour Outlook: AI: the fourth industrial revolution?

Key points
The conflict between observed inflation and soft lead indicators for economic activity continues to influence interest rates and economic forecasts. While some central banks may pause from raising rates, the overall balance of risks tilts towards tighter financial conditions. Investments with robust fundamentals and manageable debt levels are preferred in this environment.

It was a weak month for Australasian marke...

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Lewis Fowler | Posted on Jun 9, 2023
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Harbour Navigator: Is inflation sticky?

After an aggressive RBNZ tightening cycle, the New Zealand economy is likely to enter recession later this year.

Inflation, however, is unlikely to quickly return to the RBNZ’s 1-3% target range and involves three broad steps – supply chain normalisation, lower housing costs and a drop in wage growth. Only the first step is complete.


We expect the RBNZ to increasingly recognise the impact of its rapid rate hikes to highly...

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Hamish Pepper | Posted on May 22, 2023
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Harbour Outlook: Catch-22 - Inflation vs. Earnings

Key points
At a headline level, stock markets appear to be in a “catch-22”, digesting lower inflation numbers while trying to assess how much of this inflation is down to lower growth, which may then flow through to earnings. See more under ‘what to watch’.

New Zealand equities and bonds both delivered strong returns over the month, with the S&P/NZX 50 Gross index (with imputation credits) returning 1.1% and the Bloomberg NZ ...

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Chris Di Leva | Posted on May 8, 2023
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Harbour Navigator: Fortress Australia

The banking system in Australia has multiple points of difference compared to the US, all pointing to a greater capacity to weather financial and economic stress. What we heard in our visit to Australia this week was exceptionalism and resilience in the banking system.

“A show of force” is how the Australian Financial Review subsequently described their Summit. In previous years you might have heard the regulators bemoan the ...

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Andrew Bascand | Posted on Mar 31, 2023
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Harbour Outlook: Inflation not giving up without a fight

Key points
The MSCI All Country World Index returned 1.3% in New Zealand dollar terms, and -1.9% in New Zealand dollar-hedged terms. At the sub-sector level, we saw a continuation of last month’s thematic with defensive sectors (utilities, materials) lagging as investors rotated into the more interest rate-sensitive sectors such as information technology and financials.


The New Zealand equity market (S&P/NZX 50 Gross with i...

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Lewis Fowler | Posted on Mar 8, 2023
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Harbour Outlook: Quality growth through a turning point?

Key points 
The MSCI All Country World (global shares) Index rose 6.1% over the month in NZD-unhedged terms, and 7.1% in NZD-hedged terms.

The New Zealand equity market (S&P/NZX 50 Gross with imputation) finished the month up 5.7%, whilst the Australian equity market (S&P ASX 200) rose 5.7% in AUD terms in the month, and 6.3% in NZD terms. 

Bond yields declined over the month with New Zealand 10-year government bond yields e...

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Harbour team | Posted on Aug 8, 2022
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Harbour Outlook: From stagflation to low growth?

Key points 
The MSCI All Country World (global shares) Index fell -4.1% over the month in NZD-unhedged terms, and -7.7% in NZD-hedged terms. The index ended the quarter -5.7% in NZD-unhedged and -14.3% in NZD-hedged terms. 

The New Zealand equity market (S&P/NZX 50 Gross with imputation) finished the month down -3.9% (-10.3% for the quarter), whilst the Australian equity market (S&P ASX 200) fell -8.8% in AUD terms in the mon...

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Harbour team | Posted on Jul 8, 2022
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Harbour Outlook: Cycling at warp speed … recession priced in?

Key points
The MSCI All Country World (global shares) Index fell -0.2% over the month in both NZD-hedged and -unhedged terms.
The New Zealand equity market (S&P/NZX 50 Gross with imputation) finished the month down -4.8%, whilst the Australian equity market (S&P ASX 200) fell -2.6% in AUD terms (-1.9% in NZD terms).
Bond yields tracked downwards through May with a partial re-tracing through the last week of the month. As a res...

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Harbour Team | Posted on Jun 9, 2022
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Harbour Outlook: Stagflation risk, real rates & the land(s) down under

  • The MSCI All Country World (global shares) Index rose +2.4% in NZD hedged terms in March and, with the New Zealand dollar strengthening in the past month, the same Index fell -0.6% in NZD terms over the month.
  • The New Zealand equity market (S&P/NZX 50 Gross with imputation) finished the month up 1.1%, whilst the Australian equity market (S&P ASX 200) rose 6.9% in AUD terms and 7.6% in NZD terms.
  • Prompted by shifts towards faster rate hikes from offshore central banks and combined with large mortgage-based hedging flows domestically, market interest rates pushed relentlessly higher through the month, with the New Zealand 10-year Government bond yield ending at 3.2%, an increase of 0.5%.
  • Potential easing of the conflict in Europe and a clearer path for US Federal Reserve (Fed) interest rate increases saw equity markets recover through March; while production disruption and Russian sanction constraints contributed to an increase in commodity prices with the price of oil increasing another 7% over the month.
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Harbour Team | Posted on Apr 8, 2022
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Harbour Outlook: Ukraine invasion heightens already elevated volatility

  • The MSCI All Country World (global shares) Index fell -2.5% in NZD hedged terms in February and, with the New Zealand dollar strengthening in the past month, the same Index fell -5.5% in NZD terms over the month.
  • The New Zealand equity market (S&P/NZX 50 Gross with imputation) finished the month up 0.75%, whilst the Australian equity market (S&P ASX 200) rose 2.1% in both AUD and NZD terms.
  • The Reserve Bank of New Zealand (RBNZ) delivered a hawkish statement along with a 25bp hike to 1.00% in February, retaining the option to move in 50bp increments and revising its OCR forecasts higher than implied by market pricing.
  • Russia’s invasion of Ukraine has become a humanitarian disaster. The geopolitical environment is now vastly changed with a wide range of potential outcomes. It has also added further upward pressure to global energy prices and inflation.
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Harbour Team | Posted on Mar 8, 2022