Meet the new boss, same as the old boss
Global share markets had a bit of a wobble last month as AI leadership was brought into question and investors grew concerned about valuation levels in asset prices. Milford funds had their first broad negative month since March, with a lackluster Australian share market weighing on performance.

Volatility in share markets started rising in October and this spilled over to November with global shares falling over 4% before recovering strongly to finish the month unchanged. A key shift in the month was a lackluster reaction to AI leader Nvidia’s strong results which saw the stock fall 12.6% in the month. This was largely due to the emergence of technology giant Google as a serious competitor in the semiconductor space which sent Google’s share price up 13.6% last month. Technology companies Microsoft (-4.8%) and Amazon (-4.5%) also partially suffered from this change in AI leadership.

Elsewhere, falling inflation in the UK and a budget that managed not to completely disappoint saw our UK stocks continue to do well. UK/European banks continue to do well, including NatWest Group (+8.3%) and Bank of Ireland (+12.5%) whilst utility company SSE plc (+14.7%) soared on a well received strategy change. Closer to home, Australian shares underperformed (-2.7%) as stronger inflation data puts into question whether the Reserve Bank of Australia can continue cutting interest rates.

In NZ, the Reserve Bank of New Zealand delivered a ¼ point interest rate cut as expected. However, they painted an optimistic vision of the outlook and there is a high probability that they have delivered the last interest rate cut of this cycle. NZ bonds sold-off, and the NZ dollar recovered earlier losses. We have been reducing our NZ bond exposure and closed NZ dollar shorts ahead of this move.

2026 is just around the corner, and before considering the outlook its worth recognising that for all the volatility, broad asset price gains have been surprisingly strong this year. Clearly the AI theme has been dominant, and as we look to next year this will remain front and centre, even as the winners might change – just as they did last month. Global government spending should drive stronger global growth next year. This should support returns, even as asset prices remain broadly expensive.