Domestic economic data suggested that consumer spending and the housing market are weakening. The National Bank's Regional Trends report showed that activity across New Zealand fell by 0.3% for the September quarter, the first fall since June 2005, which has historically implied a negative GDP outturn within six months. The labour market tightened further still, while trade data indicated a small improvement in exports.
It was yet another rocky ride for shares this month with global equity markets falling in November and the MSCI Gross World Index ending the month down 4.2%. The New
Zealand market did not avoid the correction and ended the month down 3.5%, with the median stock down 4.5%. Currency movements were mixed over the month, with the trade-weighted index (TWI) ending the month more or less flat.
The market priced in easier monetary policy by the US Federal Reserve (Fed) in the next 12 months and, in combination with a flight to quality, the US 10 year bond yield fell 53 basis points (bps). However, in contrast to US long rates, New Zealand 10 year government bond rates fell 'just' 15 bps as inflation concerns remained and easing by the Reserve Bank of New Zealand (RBNZ) continued to be a distant prospect. Volatility affected global property securities with the US, Asia, Europe and Australia all returning negative performance. The NZ listed property sector was also down.
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