Market Commentary - June 2026

05 August 2026

  • Strong returns in a noisy quarter 

    The best time to have a fire drill is when the building isn't already burning. Any mistakes made during a drill are usually much less expensive than mistakes made during a real emergency. The same principle applies to investing.

    The second quarter of 2026 was a strong one for most investors. While headlines were dominated by conflict in the Middle East, inflation concerns, and interest rate uncertainty, global share markets generally delivered impressive returns.

    For members of Evidential KiwiSaver Scheme, that's a useful reminder: scary headlines don't always lead to poor investment outcomes.

    Markets are forward-looking. New information gets absorbed quickly into prices, and successful investors focus more on where economies and businesses are heading than on today's headlines. Last quarter was another example of how difficult it can be to predict market movements based purely on current events.

     

    When bad news doesn't produce bad returns 

    The conflict involving Iran created significant uncertainty during the quarter, particularly around oil supplies moving through the Strait of Hormuz. Higher energy prices pushed inflation expectations higher and caused many central banks to become more cautious about reducing interest rates.

    Normally, these developments would be viewed as negative for financial markets. Yet global share markets largely ignored the script. The US S&P 500 returned 15.2% over the quarter, emerging markets rose 24.1%, and Australasian shares also produced solid gains.

    Why?

    The most likely explanation is a combination of resilient corporate earnings, ongoing investment in technology, infrastructure and defence, and the market's tendency to look beyond today's challenges toward longer-term opportunities.

    The lesson is an important one. Even if someone correctly predicted the major events of the quarter, they would still have needed to predict how markets would respond. That's considerably harder.

     

    What about at home?

    Here in New Zealand, inflation concerns also influenced interest rate decisions. The Reserve Bank kept the Official Cash Rate unchanged through most of the quarter before lifting it by 0.25% in early July to 2.50%. The Bank signalled that inflation pressures remain uncertain and that further increases may still be required. While interest rates remain important for economic growth and household budgets, they are only one of many factors influencing long-term investment returns.

     

    A reminder about headlines

    One interesting example during the quarter came from migration statistics. Some media commentary suggested New Zealanders were leaving the country in unusually high numbers. However, when migration is measured relative to the size of the population, the latest figures are very close to long-term averages.

    It's a reminder that context matters. Headlines often focus on the most dramatic interpretation of data, while investors are generally better served by stepping back and looking at the bigger picture.

     

    Discipline earns the rewards

    There is no secret formula for successful investing. For Evidential KiwiSaver investors, long-term success is usually less about predicting what happens next and more about maintaining an investment strategy that matches your goals, risk tolerance and time horizon.

    Some quarters are exciting. Some are uncomfortable. Most are somewhere in between. What matters is remaining disciplined through both the good times and the difficult periods. Doing so gives you the opportunity to participate in the long-term growth that financial markets have historically rewarded.

    The second quarter delivered strong returns, but it tells us very little about what the next quarter will bring. That's why the occasional "fire drill" is helpful. When markets are calm, it's worth reminding ourselves how we'll respond when they're not.

    For long-term KiwiSaver investors, the plan usually remains the same: stay focused, stay diversified, and stay invested.

     

     

    The information contained in this article is intended to be of a general nature. It does not take into account the objectives, financial situation or needs of any particular person, and does not constitute financial advice. Consilium NZ Limited is the issuer of the Evidential KiwiSaver Scheme. For more information on Evidential KiwiSaver Scheme including a copy of the Product Disclosure Statement, visit www.evidential.co.nz