Market & Portfolio Update - October 2025

The global share market (represented by the MSCI World Gross Index) was up +3.5% in NZ dollar terms in October. The relatively strong month was underpinned by signs of easing trade tensions between the US and China and another solid US corporate earnings season.

During the month, the US Federal Reserve cut interest rates, determining a 0.25% rate cut would be supportive for the economy without fueling more inflation. Looking forward, the Federal Reserve noted a further rate cut in December was not a foregone conclusion. Markets interpreted this as a signal that the Fed may pause rate cuts to assess the impact of its recent actions, prompting investors to pare back expectations of further easing.

Many economists were split on the extent of a rate cut when the Reserve Bank of New Zealand (RBNZ) met in October. The RBNZ discussed two options but reached consensus on cutting the Official Cash Rate by 0.50% to 2.50%. The RBNZ noted there are signs of recovery in consumption and employment growth but highlighted that constrained supply and cost pressures on businesses remain.  The RBNZ also mentioned a further rate cut in November is possible to deliver a sustained economic recovery. 

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