GoalsGetter Monthly Commentary June 2025

June was another strong month for global equities as the remarkable rally from the early April “Liberation Day” sell-off continued despite escalating conflict in the Middle East. US and UK equity markets made new all-time record highs, surpassing levels gained in Q1 before the playing field for global trade was altered. Global bonds (hedged to NZD) and NZ bonds both posted a solid gain in June to round out a return of 1.3% and 1.4% respectively for the quarter. Geo-politics dominated the narrative in June, with ongoing updates on global trade negotiations. These were generally constructive announcements, albeit with very few finalised trade agreements being completed as the early July tariff deadline loomed large. The conflict in the Middle East escalated with the US military targeting Iranian nuclear sites, however Israeli-Iran negotiations for a ceasefire quickly followed and equity markets resumed their march higher into quarter end. The MSCI ACWI (NZD Hedged) was up 3.8% for June, and up 9.2% for the quarter. The Kiwi was stronger versus the US Dollar and most of the other major currencies over the month and the quarter. Returns for the MSCI ACWI (in NZD terms) were less than fully hedged, up 2.3% for the month, and up 3.8% for the quarter.

The US Federal Reserve (Fed) remained in ‘wait-and-see’ mode over the quarter in keeping rates at 4.25-4.50% following their May and June meetings. They retained a slightly dovish tone and expectations are for 1 or 2 rate cuts later this year. The US labour market has held up well over the first 6 months of 2025, and services and manufacturing surveys remained at ‘neutral’ levels, not indicative of a strong economy, but not suggesting an imminent recession either. The BoE and ECB both continued cutting rates in the second quarter, and both signalled they are likely to continue doing so over the remainder of the year. Japan remains an obvious outlier to most other central banks with interest rate hikes signalled for later in the year amidst robust economic growth and building inflationary pressures.

On a regional basis the 2023-24 pattern of US and Japanese equities leading the way resumed over the second quarter, while share markets in Europe, UK, Australia and New Zealand delivered more muted returns. On a sector basis, more ‘growth’ focused sectors such as Information Technology and Communications Services led the way, while Energy and Healthcare lagged the broader market.