Wall Street's bull run has been a boon for KiwiSaver funds. Photo / File
This week, the S&P 500 and Nasdaq hit record highs, boosted by gains in technology stocks and a trade agreement between the United States and Vietnam.
The Dow Jones Industrial Average is only a fraction short of its record close on December 4.
Meanwhile, a better-than-expected US jobs report for June reinforced expectations that the US Federal Reserve would not cut official interest rates this year.
US stocks have more than made up for the tariff-driven selloff, so what will that mean for KiwiSaver investors, many of whom will have some kind of exposure to Wall Street?
As at the end of March, investment research firm Morningstar tracked about $121 billion of assets in KiwiSaver, of which $49b was invested in international stock markets.
“The MSCI World Index is about 72% US-based, so we would estimate that there would be around $35b invested in the US equity markets,” the firm told Stock Takes.
That’s welcome news for KiwiSaver investors, given the New Zealand sharemarket has underperformed, reflecting the weak economy.
Mark Lister, investment director at Craigs Investment Partners, said diversification had been a big plus.
“The fact that KiwiSaver investors have a healthy allocation of US shares has been a very good thing in recent years because many investors - if they were making their own investment decisions - might have tilted towards the local market, which has been an underperformer.
“The fact that KiwiSaver funds have been very internationally focused [and with the US being the world’s biggest share market] has ensured that KiwiSaver members and investors have had some very good returns in recent years.”
Lister noted that, while the US market was at record highs, it had suffered a big fall in April on the back of US President Donald Trump’s “Liberation Day” tariff announcement.
The US market had recouped its losses, but the weaker US dollar offset some of those gains for Kiwis.
Lister said international diversification in general had been a positive for KiwiSaver investors, not just because of Wall Street’s performance.
He noted emerging markets had also been strong, along with Japan, Europe and the UK.
“Europe, to me, is probably one of the standouts because the euro has also been strong.
“For a New Zealand investor, you’ve got the double whammy of a strongly performing European market and a rising euro against the Kiwi dollar.
“All in all, it hasn’t been too bad in the first six months of the year for investors, and it’s been that international exposure that will have helped them, despite the local share market and the housing market continuing to lag.”
While US stock markets look to be in full recovery mode, somebody has forgotten the US dollar, which is having its worst start to the year since 1973.
Trump’s trade and economic policies have prompted global investors to rethink their exposure to the US, but the greenback’s role as the world’s reserve currency looks to be safe.
BlackRock, the world’s biggest asset manager, paints an optimistic outlook for US equities, despite the uncertainties posed by Trump’s policies.
“As US policy reclaims centre stage, we think immutable economic laws will limit extremes, while tax cuts and deregulation could boost investor sentiment,” BlackRock said in a commentary.
US policy developments were coming thick and fast.
“As the end of the 90-day tariff pause looms, we think immutable economic laws will prevent a return to a maximal stance.
“We are also seeing movement in US policies that could boost investor sentiment, including tax cuts and regulatory reforms like a federal stablecoin framework.
“These reforms will take time, but support our US equities overweight [position].
“We stay underweight long-term Treasuries on sticky inflation and deficit concerns.”
Trump’s pause on sweeping tariffs expires on Wednesday.
In New Zealand’s case, exporters face a 10% tariff on exports to the US.
But analysts say the risk lies not so much with tariffs on New Zealand goods but the impact that they will have on world growth.
Kiwibank chief economist Jarrod Kerr noted the US dollar’s weakness and the questions being asked about its reserve status.
“My opinion is that we have not seen a dumping of the US dollar at all.
“We have seen a diversification, perhaps, but certainly not a dumping.
“Yields on US Treasuries are not rising in a concerning way - in fact, they have fallen (4.24% for US 10-years).”
The weak US dollar is good news for Trump, who has long called for a lower greenback to make US manufacturers more competitive.
“Trump is pretty sensitive to the financial markets, but having the dollar drop in the way that it has will not concern him at all,” Kerr said.
While the New Zealand share market remained sidelined, the one bright spot seemed to be the agricultural sector.
“My worry is that, if these tariffs come in, they will start to slow the world economy down, which is what many forecast.
“That’s a worry because we are exposed to that slowdown.
“And the best-performing sectors of the economy are the most exposed to the global slowdown.”
A Malaysian company may be interested in buying Fletcher Building’s construction unit, according to a report in The Australian.
The newspaper’s “Dataroom” said Malaysia’s Gamuda had expressed an interest in buying the Fletcher Building construction arm.
Gamuda is an engineering, property and infrastructure group and is one of the largest in Malaysia’s infrastructure sector.
Early last month, Fletcher Building told the NZX that it had received inquiries from parties interested in its businesses, including its construction division, after the company’s announcement of a strategic review.
“The company advises that no decisions have been made to sell any of its businesses,” it said then.
Tucked away in NZX-listed Burger Fuel’s annual report was a comment on the number of young people leaving for Australia.
The chain said there had been a “significant” exodus of “home-grown, hardcore” Burger Fuel customers to Australia and other overseas destinations.
“These younger Burger Fuel customers are not being replaced by incoming migrants, who are unlikely to purchase from Burger Fuel for some years,” the company said.
Trading in 2025 had been “one of the toughest on record” for the hospitality industry, the report said.
“Although there is talk of economic improvement, we have not seen this translate to sales; the economy remains in recession.
“The slow reduction of interest rates and general economic uncertainty has led to consumers keeping their wallets in their pockets.
“People are spending less and most certainly eating out less.”
“We do not anticipate significant positive changes in the economic environment over the next 12 months,” chairman Alan Gourdie and chief executive Josef Roberts said.
Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.