Investment market performance Q1 2026
As we navigate the complexities of the financial landscape, it’s important to stay informed about how investment markets are performing. The first quarter of 2026 (December 31 – March 31) presented both challenges and opportunities for investors. In this article, we take a closer look at how investment markets performed over the quarter, and we highlight some of the key economic factors from across the world that influenced these outcomes.
New Zealand
Share market: The Solactive New Zealand Top 50 Index saw a -4.5% drop in Q1. Since the start of the Middle East conflict, markets have been expecting higher inflation and therefore higher interest rates, which make New Zealand dividend-paying companies less attractive.
Housing market: The QV House Price Index showed a small decrease of -0.1% in house prices nationally in the three months to the end of March 2026. House prices are now 0.4% lower than the same time in 2025. The average property value nationally is now NZ$909,572.
Interest rates: After cutting the official cash rate by 0.75% during Q4 2025 to 2.25%, the Reserve Bank of New Zealand (RBNZ) then kept rates on hold in February 2026. New Zealand’s economy saw an increase of 1.1% in Q3 2025 followed by an increase of 1.3% in Q4 2025. The inflation rate in Q1 2026 remained stubbornly high at 3.1%, and markets are now expecting several interest rate hikes in 2026.
Australia
Share market: The Solactive Australia 200 Index, which represents Australia’s top 200 companies, was down -1.4% over the quarter, which outperformed global stock markets. The banking sector benefited from higher interest rates, while commodity-related companies benefited from rising commodity prices.
Interest rates: Australia’s inflation rate rose to 3.8% in Q4, up from 3.4% in Q3 and above the Reserve Bank of Australia’s (RBA) target range of 2-3%. Core inflation, which excludes volatile items like food and energy, rose from 3.0% in Q3 to 3.4% in Q4. The RBA increased the cash rate to 4.1% at its March 2026 meeting, following a February hike. In May the cash rate was increased further, to 4.35%. The decisions reflected persistent inflationary pressures and increased uncertainty linked to the Middle East conflict and higher fuel prices. The markets are expecting at least one more hike in 2026.
Housing market: The Australian housing market, as measured by Cotality's Home Value Index (HVI), recorded an increase of +1.9% in Q1 2026, following a +2.7% increase in Q4 2025. The increase over the whole of 2025 was +8.3%. The strong recent growth has been attributed to a combination of factors that include housing supply shortages and population growth driven by immigration, along with falling interest rates in 2025, which acted as a catalyst for renewed momentum.
Australian dollar: The Australian dollar (AUD) continued to recover against the US Dollar over the quarter, rising 0.6% from 66.7 to 69.0. The continued recovery is mainly due to the RBA’s decision to begin increasing interest rates in response to stronger inflation, in contrast to the Fed in the US, which is not looking to increase interest rates in the near-term.
United States
Share market: US stocks were down over 4% in USD terms. Tech stocks struggled in Q1 2026 due to concerns around the impact of AI on software companies. The Middle East conflict was also negative for stocks as markets began to price in energy-driven inflation, which is historically bad for stocks.
Interest rates: The Federal Reserve kept interest rates unchanged at a target of 3.50%-3.75% over Q1 2026. This is in line with the Fed’s goals of achieving maximum employment and price stability. The Personal Consumption Expenditures (PCE) inflation rate stood at +2.8% at the end of February, while core inflation was at 2.6%.
A review of Q1 2026
Financial markets saw negative returns in Q1 following a year of positive returns across all major asset classes in 2025. Concerns around the effects of AI, and the conflict in the Middle East, both took their toll. Bond returns were also slightly negative as the energy price shock led to concerns of rising inflation through 2026.
We continue to monitor the major drivers of markets and their impact on Resolution Life Australasian portfolios. While investing always involves managing uncertainty, the current environment is mired in elevated uncertainty. The best form of defence for portfolios is to continue to be well diversified, with exposure to a range of asset classes that can help during volatile times.
Sources:
1. Solactive Australia 200 Index Performance - Solactive
2. Solactive New Zealand Top 50 Index Performance – Solactive
3. Reserve Bank of Australia Monetary Policy - RBA
4. Reserve Bank of New Zealand Official Cash Rate - RBNZ
5. Australian House Prices – Cotality Home Value Index
6. NZ house Prices – QV House Price Index
7. FactSet
Conventional product bonus rates – New Zealand
2026 Bonus Declaration – key points at a glance
Stable bonus rates, plus special one-off bonus, mean higher typical policy values
- Annual bonus rates declared at the same levels as last year.
- Terminal/End bonus rates are being maintained at current levels.
- Policies will also receive a one-off special bonus of 6%.
- The combined impact is typically higher maturity, claim and surrender values compared with last year. Individual impacts are shown on each customer’s Annual Statement / Bonus Certificate.
How bonuses work
Eligible Whole of Life or Endowment (Conventional) policies share in the performance of the underlying investment portfolios through two types of bonuses:
- Annual Bonuses:
- Added once a year on the policy anniversary.
- Once credited, they are guaranteed and form a permanent addition to a policy’s maturity and claim values (unless cashed or the policy is altered).
- A partial allowance is included in surrender values.
- Terminal/End Bonuses:
- Are not guaranteed and can be increased or decreased at any time.
- Payable in full on policy maturity or claim.
- A partial allowance is included in surrender values.
While bonus rates are monitored throughout the year, changes are normally declared annually.
What’s changing for 2026
Following a year of good investment performance, Resolution Life is pleased to confirm the following bonus rates effective from either 1 April or 1 May 2026 (based on policy type):
Annual Bonus Rates
- Declared at the same levels as last year for all eligible policies.
Terminal/End Bonus Rates
- Maintained at their current levels for all eligible policies.
One-off Special Bonus
- Eligible policies will also receive a one-off special bonus of 6% of Sum Insured and existing Annual Bonuses.
- This bonus will be added on the policy anniversary alongside the normal Annual Bonus.
- Supplementary “one-off” Annual Bonuses like this (in addition to normal Annual Bonuses) may be declared from time to time.
- Importantly, it increases the guaranteed proportion of maturity and claim benefits for eligible policyholders.
The impact of this declaration will be shown on each customer’s Annual Statement / Bonus Certificate. Maturity and claim values shown will generally be higher than last year.
Surrender values will also typically increase due to the additional Annual Bonuses and ageing of the policy.
Please note, surrender values are not guaranteed and may increase or decrease at any time.
Investment Performance – impact on bonus rates
Investment performance and expected future returns are key drivers of bonus rates decisions. Over 2025:
- Investment portfolios performed ahead of expectations,
- Good returns were driven by returns on global equities (shares).
- Medium-to-long-term bond yields in New Zealand ended the year at very similar levels to those at the start.
Long-term bond yields influence future return expectations and the amounts we need to set aside (capital) to ensure we can meet obligations to policyholders. Historically, movements in Annual bonus rates have broadly aligned with long-term bond yield trends.
Terminal/End bonuses are designed to pass on capital growth usually from assets such as equities and property. While returns are smoothed, these bonuses can be more volatile than Annual bonuses.
We aim to set bonus rates that are supportable and fair over the life of policies. Overall, market conditions supported the decision to maintain bonus rates and apply a one-off special bonus for 2026.
Additional resources
- Customer bonus rate flyers are available on our website at: resolutionlife.co.nz/whole-of-life-and-endowment.
- Bonus rate tables for the different policy types and bonus scales are also available on our website at the same location.
If you need to contact us:
- The fastest way is to chat with us online at resolutionlife.co.nz.
- Submit an online enquiry at resolutionlife.co.nz/enquiry
- Call us on 0800 808 267
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A reminder that the Client Resource Hub is available with practical materials to support you and your client conversations.
View the Client Resource Hub
Important information
The content of this website is for information only, it does not contain any financial advice or other professional advice or make any recommendations about a financial product or service being right for you. The information provided by Resolution Life Australasia Limited ABN 84 079 300 379, NZ Company No. 281363, AFSL No. 233671 (Resolution Life), is of a general nature and does not take into account your objectives, financial situation or needs. Before taking any action, you should always seek financial advice or other professional advice relevant to your objectives, financial situation and needs, as well as consider the policy document for the product. Any guarantee offered in the product is only provided by Resolution Life.
Resolution Life does not make any representation or warranty as to the accuracy, reliability or completeness of material on this website nor accepts any liability or responsibility for any acts or decisions based on such information.
Resolution Life can be contacted at resolutionlife.co.nz/contact-us or by calling 0800 808 267.
