2025 has been another unpredictable year for investors. Global and New Zealand markets navigated a mix of economic recovery, renewed trade tensions, and geopolitical uncertainty, all of which tested confidence at times. Yet despite the turbulence, many diversified investors appear to have finished the year in positive territory, showing that uncertainty and opportunity often go hand in hand.
Global tensions and trade pressures
Early in 2025, the United States announced broad “reciprocal” tariff hikes that, according to Bloomberg and The Budget Lab at Yale, lifted the average effective tariff rate to around 22.5 percent — the highest since 1909. The ripple effects were felt worldwide, disrupting supply chains and weighing on business confidence across Asia-Pacific. At the same time, ongoing conflicts in Eastern Europe and the Middle East contributed to periods of market volatility, reminding investors how quickly global headlines can shift economic expectations.
In New Zealand, the S&P/NZX 50 Price Index has posted modest year-on-year gains, supported by exporters and infrastructure companies. Globally, broad equity benchmarks such as the MSCI World Index recorded mid-to-high-teens gains for the year to October, led by technology and healthcare stocks. Morningstar observed that enthusiasm around artificial intelligence, expectations of lower interest rates, and a weaker US dollar were among the key drivers behind this year’s broad market gains.
A year of shifting expectations
Interest-rate cuts in New Zealand and some overseas markets helped support confidence, though uneven consumer spending and currency moves kept conditions mixed. In New Zealand, the Reserve Bank’s October move to cut the Official Cash Rate (OCR) to 2.5 percent provided some relief while keeping a cautious stance on inflation.
In the US, the Federal Reserve delivered two 2025 cuts, while other central banks such as the ECB and Bank of England held rates, underscoring how policy settings diverged across regions. For investors, it was a year that rewarded balance rather than boldness. Those holding diversified portfolios generally saw steady progress despite the noise, with Morningstar noting that diversification and multi-asset approaches helped many investors navigate volatility.
Volatility is part of the journey
Markets adjusted repeatedly to global news: trade disputes, shifting inflation expectations, and changes in growth forecasts. Such swings are a normal part of investing, not a sign that something is wrong. Over time, market performance tends to reflect broader economic and corporate trends more than short-term events.
Staying focused on the bigger picture
Market ups and downs can naturally make investors uneasy. However, history shows that patience has often paid off and some of the strongest recoveries have followed periods of volatility. Broad diversification and regular check-ins with an adviser help investors maintain perspective and ensure their approach still fits their goals and comfort level.
The key takeaway? Movement is inevitable, but having a clear plan makes it easier to stay confident through the cycle.
Looking ahead to 2026
As 2026 approaches, inflation pressures are easing in many parts of the world, while New Zealand inflation remains near the top of the Reserve Bank’s 1–3 percent target band. Interest rates in most major economies now appear close to their peaks, with policy shifts becoming more measured. Growth prospects remain moderate but broadly stable, and opportunities are likely to vary across sectors.
If you’d like to see how your portfolio is positioned for 2026, we can review it with you to ensure it still reflects your goals, time horizon, and comfort with risk, helping you stay confident about where your investments are heading in the year ahead.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.