Weekly market wrap up

Australia’s February CPI offered the market a small sigh of relief. Annual inflation eased to 3.7% from 3.8% in January, while the monthly index was flat in original terms and up 0.2% on a seasonally adjusted basis. The broader picture, however, remains one of persistence rather than resolution. Underlying inflation, as measured by the trimmed mean, held at 3.3%, suggesting price pressures are not fading particularly quickly. Housing continues to serve as the main source of pressure, up 7.2% over the year, driven in part by a 37.0% increase in electricity prices as the effect of earlier rebates faded, alongside higher rents and new dwelling costs. Transport provided some offset, down 0.2% annually due to lower fuel prices, although that may prove temporary given recent moves in oil markets. 

Fonterra’s half-year result had the look of a co-op enjoying a solid run of form. Revenue rose to NZ$13.9 billion, while profit after tax reached NZ$750 million. For the wider New Zealand economy, the signals were also positive. Fonterra lifted its Farmgate Milk Price midpoint to NZ$9.70 per kgMS, nudged full-year earnings guidance to 50 - 65 cents per share, and declared a 24-cent interim dividend alongside a 16-cent special Mainland dividend. The result was supported by record South Island milk volumes, stronger margins, and solid performance across its Ingredients and Foodservice channels, suggesting this was not simply the global dairy cycle doing all the work. 

The latest World Happiness Report has landed, and once again the Nordic countries sit comfortably at the top of the table, with Finland leading the way. At this point, it feels less like a surprise and more like an annual tradition. The rankings show little movement from year to year, with the same countries consistently clustered near the top. That stability suggests happiness is shaped more by long-term structural factors than short-term economic swings. New Zealand continues to perform well, remaining in the upper tier without quite challenging the leaders. The report draws on measures such as social trust, institutional quality and personal freedom, reinforcing the idea that prosperity alone does not guarantee wellbeing. GDP still plays a role, but it is clearly not the whole story. 

RBNZ Governor Anna Breman’s speech this week captured the uncomfortable position central banks face when geopolitics spills into economics. The escalation in the Middle East is lifting costs across fuel, transport, and food production. For New Zealand, that translates relatively quickly into broader inflation pressures, though the initial shock sits outside the control of monetary policy. Breman’s message was clear - focus less on the immediate spike and more on whether it persists. The Reserve Bank is inclined to look through short-term price jumps, but remains alert to the risk that they feed into expectations and wage-setting behaviour. It is a delicate balance between reacting too soon or too late, with timing doing much of the work.