The second quarter of the year was highlighted by strong corporate and investor resilience in the face of ongoing trade and geopolitical uncertainties. With the AI investment boom continuing to propel markets, returns from global shares were, on average, very strong.
In this update, we reflect on how the conflict in the Middle East quickly evolved into a battle for control over the Strait of Hormuz, and the impact this had on global inflation. We also look at why broad share market returns were so strong over the quarter when the immediate outlook was so uncertain. Finally, we look much closer to home on the outlook for New Zealand interest rates and take a slightly more nuanced look at New Zealand’s migration trends.
In the feature article, titled ‘Lessons from 100 years of capitalism’, we review a study of long-term US share market returns and highlight two key findings:
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- only a very small number of shares in a market are responsible for the majority of the shareholder wealth creation
- accessing these returns through prudent diversification (not concentration) is likely to be the best investment approach.
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The second quarter of 2026 was yet another example of markets operating independently of the news headlines and “climbing a wall of worry”.
Investors were able to ‘look past’ the murky geopolitical and inflationary backdrop because expectations for future corporate earnings and economic activity remained favourable.
Although it can be very difficult for individuals to distance themselves from the unease of the daily news headlines, we see time and time again that focusing on the horizon, and not the immediate uncertainties, is often where the best investment decisions are made.
Between newsletters we often post relevant blogs under the News/Blog section of our web sites at www.lufords.co.nz and www.uk-pension-transfer.co.nz