- Jan 16
Happy New Year!
We hope you’ve had an enjoyable holiday season and are feeling refreshed for an exciting year ahead.
The TFS team are returning well rested and energised, having enjoyed their various travels and celebrations around the world and close to home.
In this investment update, we cover what’s happened in the investment world over the past few weeks and provide a few reminders around tax as we approach the end of the financial year 2026.As you are aware, global equity markets are currently trading at all-time highs, which has led investors to question whether this momentum can continue or if a market correction may be on the horizon.
At the same time, lower interest rates, resilient growth in certain sectors, improving growth expectations in emerging markets, continued strength in company earnings, and the expectation that the U.S. may avoid a recession are all contributing to market optimism and keeping valuations elevated.
If you have any queries or concerns about how your investments are faring in the current markets or your financial, investment, lending, or retirement planning matters, please feel free to give our office a call at 09 553 8928 or email us at info@trilogyfs.co.nz.
We look forward to working with you in 2026.
Sincerely,
The Team at Trilogy Financial Solutions
What happened over the break
Global markets
Global markets started 2026 on a cautiously positive note.
Stocks are holding on to strong gains from 2025.
Bonds and currencies are adjusting to a gradual move towards easier monetary policy in major economies.
In New Zealand, improving business confidence and steady activity are supporting local assets despite earlier rate cuts.
Global equities and risk sentiment
U.S. equities ended 2025 with a third straight year of double-digit gains. The S&P 500 rose 17.9%, the Dow Jones Industrial Average returned 14.9%, and the Nasdaq Composite returned about 21.1%.
European stocks kept climbing into year-end, with the STOXX Europe 600 posting its best annual return since 2021 (approx. 17%) and starting 2026 near record highs (over 600 points).
The UK’s FTSE 100 rose over 20% in 2025 and briefly topped 10,000 points at the start of 2026, showing broad strength in last year’s rally.
Central banks and policy direction
The Federal Reserve cut rates by 25 basis points in December to 3.5–3.75%.
Fed minutes showed mixed views: some favour more cuts if inflation falls; others prefer pausing after December’s move.
The Bank of Japan raised its key rate by 25 basis points to 0.75% in December, supported by stronger profits, wage growth, and lower external risks.
Other central banks like the ECB and the Bank of Canada are holding rates steady and signaling they’ll stay on hold for a while.
Currencies and commodities
The U.S. dollar index had its weakest year since 2017 in 2025, dropping about 9%.
This decline has boosted international stocks and higher-risk currencies heading into 2026.
The New Zealand dollar strengthened against the U.S. dollar in December, trading near 0.58 on December 10, helped by earlier RBNZ easing and better local data.
Energy stocks outperformed late in the year as geopolitical tensions pushed oil prices higher, even as trading volumes slowed during the holidays.
United States and Trump
Trump has proposed a temporary 10% cap on credit‑card interest rates and a ban on large institutional investors buying additional single‑family homes, signalling greater intervention in US consumer credit and housing that could disrupt US financials and property REITs held in global portfolios.
Trump has declared a new 25% tariff on all trade with any country “doing business” with Iran, potentially hitting major economies such as China, India, and Turkey and adding another layer of uncertainty to global supply chains and trade‑exposed NZ exporters.
New Zealand macro and markets
Business confidence in New Zealand rose again in December, with headline sentiment at 73.6, the highest since the mid-1990s.
Activity improved compared to last year, especially in services, while agriculture sentiment weakened on softer milk price expectations.
Treasury’s late-December update noted broad growth across sectors and strong household spending, supported by lower borrowing costs and easing food and rent inflation.
Earlier rate cuts are clearly flowing through to the economy.
Early 2026 outlook
Major firms like J.P. Morgan expect global stocks to keep rising in 2026, with positive returns across developed and emerging markets.
Rate cuts and steady growth are expected to support risk assets.
Watchlists for 2026 highlight Fed leadership changes, political risks, and the pace of disinflation as key drivers of volatility.
For diversified investors, falling rates, a weaker dollar, and better business sentiment suggest staying invested in global risk assets while being selective by sector and region as the cycle matures.
Tax reminders
As the financial year draws to a close, it’s a good time to review your tax details to make sure everything is correct. Here are a few key points to check:
Confirm your tax rate: Make sure your income tax rate is up to date. If your circumstances have changed during the year, your tax rate may need adjusting to avoid underpayment or overpayment.
For example, if you have recently retired and are still working, you may need to treat NZ Super as your secondary income if your employment earns you a greater income.
Another example is if you have recently paid off your student loan. You will need to manually change your tax code with your employer to ensure you’re no longer making extra deductions.
Understand How PIR Works: Your Prescribed Investor Rate (PIR) is the tax rate applied to income earned from your investment funds. It’s based on your taxable income from the last two years, so if your income has changed, your PIR might need updating.
Find out your PIR: You can use IRD’s PIR questionnaire to determine your PIR rate - it takes less than a minute to complete.
Check Your PIR: You can confirm or update your PIR through your investment provider, checking statements, or by logging into your account. If you’re unsure which PIR applies to you, the IRD website has a simple tool to help you calculate the correct rate.
You’re always welcome to get in touch with us if you have any questions regarding your PIR or would like to make changes to your existing rate.
Upcoming important dates
18 February
Next OCR announcement
31 March
End of Financial Year 2026
20 May - 10 June
TFS Quarter 2 review season
If you would like to discuss your current portfolio, retirement planning needs, goals-based investing approach, or any other financial planning matters please feel free to give our office a call at 09 553 8928 or email us at info@trilogyfs.co.nz.
We are always happy to help.
Sincerely,
The Team at Trilogy Financial Solutions
