Market Update: Why Global Drops Might Be Showing in Your KiwiSaver and What to Do About It
A Tough Week for Markets – What Happened?
Markets around the world struggled this week, and if you’re in a Growth or Aggressive KiwiSaver fund, you may have noticed your balance dip slightly. Here’s a breakdown of what drove the volatility:
United States - The Main Catalyst
Weak Jobs Data: The U.S. economy added just 73,000 jobs in July, well below expectations. Previous months were revised down by over 250,000 jobs, suggesting the labour market is slowing more than expected.
Rising Rate Cut Bets: With job growth cooling, markets started pricing in a 75% chance of a U.S. Federal Reserve interest rate cut in September. While rate cuts often help markets long-term, in the short term they can spook investors by signalling economic weakness.
New Tariffs Announced: The White House surprised markets with an announcement of new tariffs on key goods from several Asian economies, set to begin August 7. This triggered fears of slower global trade and rising costs for businesses.
Result:
S&P 500 dropped - 2.4%
Dow Jones fell - 2.9%
Nasdaq down - 2.2%
Russell 2000 (small caps) fell - 4.2%
Australia - Holding On, But Wobbly
The ASX 200 fell - 0.1% for the week, with strong retail and energy sectors offset by pressure on tech and exporters.
Consumer confidence has ticked up, but the Australian market is sensitive to Chinese data and U.S. policy shifts, both of which leaned negative this week.
New Zealand - A Modest Pullback
The NZX 50 dropped ~1.0%, mostly due to global sentiment rather than local news.
New Zealand’s inflation has eased slightly, which is good for interest rates, but soft earnings results from a few key companies weighed on the index.
Exporters are also keeping an eye on global demand, especially if tariffs reduce consumption in overseas markets.
What Does This Mean for KiwiSaver?
If you’re in a Balanced, Growth, or Aggressive fund, your KiwiSaver has exposure to both New Zealand and global share markets, especially the U.S., where tech stocks and large caps are a major component.
So when global share markets fall, especially sharply like they did this week, it can temporarily pull down your KiwiSaver balance.
📉 This doesn’t mean your fund is underperforming.
📈 It means it’s doing exactly what it’s designed to do, investing in long-term growth assets that go through short-term ups and downs.
Don’t let short-term dips shake long-term goals. Let’s make sure your KiwiSaver is still on track.