Despite volatility caused by the situation in the Middle East,
markets experienced a meaningful recovery in the June quarter,
with investor focus shifting towards strong earnings and a solid
economy. The announcement of a U.S.-Iran ceasefire framework
and a memorandum of understanding helped ease concerns
about a broader conflict. Energy prices fell back, and investor
sentiment improved as fears of a sustained disruption to global
energy supplies diminished. The MSCI World Index finished the
quarter up 14.0% (local currency), with continued momentum in
artificial intelligence (AI) and related capital investment cycles
being the main driver.

Emerging markets equities ended the quarter up 24.1%, with
performance dominated by the technology-orientated markets of
Taiwan and Korea. Strong gains in memory and semiconductor
stocks, supported by ongoing AI demand, were the main reason
for this performance. Australian and New Zealand equities gained
4.0% and 5.6%, respectively, on optimism that Middle East
tensions could ease.

Global bond markets were mainly affected by changing energy
prices and inflation expectations, helping drive the Bloomberg
Global Aggregate Index up 1.0% for the quarter. Central banks
remained cautious but watched closely for signs that inflation
could pick up again. The Federal Reserve kept interest rates
unchanged as the economy remained resilient and inflation
remained elevated.

Locally, the Reserve Bank of New Zealand held the Official Cash
Rate (OCR) steady at 2.25% in May and raised it to 2.5% in July as
inflation persisted. The New Zealand bond market ended the
quarter up 2.8% as bond yields fell across the curve during the
quarter, with inflation remaining above central bank targets amid
the Middle East conflict.

Global listed property and global listed infrastructure had another
positive quarter, finishing up 8.5% and 2.3% respectively, but
they did not perform as strongly as international equities.