Monthly Market Update
Most global markets were down in local currency terms, including the US market, with the S&P 500 Index falling 1.6%.At home the NZD saw a sharp drop after the Reserve Bank of New Zealand surprised the market with a 50bp cut to the OCR, versus market expectations of 25bp.
Investing in a low interest environment
The collapse of 67 finance companies between 2006 and 2012, with a corresponding loss of $3 billion, should forever serve as a reminder to investors about the risks of chasing yield. But in the current low interest environment, this temptation could once again rear its ugly head.
Interest rates at 1%, what does this mean for markets and investors?
Last week the Reserve Bank of New Zealand (RBNZ) surprised the market by cutting the official cash rate (OCR) by 0.5% to a new all-time low of 1%. Most economists were expecting this level to be reached this year, but not in one go, and now the natural question is whether this will go even lower in the coming months.