Your quarterly market commentary

Overview 
 

• Strong returns alongside lower inflation: Global share markets generally finished 2025 higher, helped by moderating inflation and the start of interest rate cuts in several regions. Technology and AI were the main reasons for market growth, but leading sectors broadened late in the year to include cyclicals and quality income corporates.  
• Bonds improved as yields eased from cycle peaks, supporting diversified portfolios.  
• Outlook constructive: With inflation trending down and earnings broadly resilient, diversification and disciplined, long term investing continue to be your best allies.  

2025 market review 
 

Equities: more companies did well as supportive policies were introduced 

• Global rally extends: US stock markets spent much of 2025 near record highs, with earnings above long run averages. Technology and communication services led early; later in the year, consumer and industrial names participated as policy clarity improved. International markets in Europe and Asia advanced in tandem, though performance varied by country.  
• NZ shares: Domestic equities saw moderate gains, aided by easing price pressures and improved corporate cost control. Diversifying investments across different regions and industries helped New Zealand investors avoid problems that only affect one area or sector.  
• Fixed income: yields peaked, then stepped down. Central banks in several economies pivoted from holding interest rates steady to cautious cutting as inflation pressures cooled. Bond prices rose (yields fell), rewarding investors who stayed allocated to high quality fixed income throughout the cycle. The shift also supported balanced and conservative diversified funds. 
   

New Zealand economy 

• Inflation cooled from prior highs, helping the RBNZ begin a gradual normalisation path for monetary policy. Mortgage and business borrowing costs edged lower from their peaks, while households remained focused on budgeting and incremental savings. The backdrop still calls for steady KiwiSaver contributions and appropriate fund choices for time horizon and risk appetite.  

What this meant for diversified investors at AMP 
 

Our approach remains the same: staying diversified across asset classes, sectors, and countries and maintaining a long-term perspective so short-term ups and downs don’t derail progress. That same approach remained effective in 2025, with equities and bonds both contributing at different points in the year.  
 

Key themes we watched in 2025 
 

1. Disinflation & policy pivot: Falling inflation enabled measured rate cuts, lifting bond prices and supporting equity valuations. 
2. Earnings resilience: Broadly healthy corporate results underpinned equity markets beyond AI leaders.  
3. Trade/geopolitics: Headlines (tariffs, regional tensions) created short term volatility. AMP’s guidance: keep focused on long term goals and diversified portfolios rather than reacting to each news cycle. 

Looking ahead through 2026 
 

With inflation continuing to trend lower and policy settings becoming less restrictive, we expect more stable returns across diversified portfolios. Key risks to watch include differences in growth rates between regions, pressures on corporate margins, and potential spikes in energy prices or trade tensions. As always, diversification and discipline remain at the heart of AMP’s investment philosophy. 

Recent geopolitical developments, such as the U.S. operation in Venezuela and the capture of President Nicolás Maduro, serve as reminders of how quickly global events can change. While such headlines may seem dramatic, their direct impact on markets is likely to be limited, given Venezuela’s small role in global oil production. Broader uncertainties persist, including ongoing conflicts in regions like Ukraine and shifting international alliances. In this environment, AMP continues to emphasize the importance of diversification and long-term planning, supported by insights from partners like BlackRock®. Rather than reacting to every news cycle, we encourage investors to remain calm and maintain a balanced portfolio. History shows that markets are resilient, even in the face of geopolitical surprises. By staying diversified and disciplined, investors can navigate uncertainty and keep their long-term financial goals on track. 
 

Webinar – A year in review and what’s ahead 
 

For more on what to expect in the year ahead, including how global events and new technology like AI are shaping your investments watch our webinar: