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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.
 

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.
 

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.
 

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 - Australia

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 for almost all policies.
  • Terminal/End bonus rates are also being maintained at current levels for almost all policies.
  • Most policies will receive a one-off special bonus of between 3% – 6%.
  • The combined impact is typically higher maturity, claim and withdrawal values compared with last year. Individual impacts are shown on each customer’s Annual Statement.
     

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 withdrawal 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 withdrawal 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 almost all policies.
  • A small number of policies will receive slightly higher rates.

Terminal/End Bonus Rates

  • Maintained at their current levels for almost all policies.
  • Small increases apply for some policies.

One-off Special Bonus

  • Former AMP Life and National Mutual Life Association of Australasia (NMLA) policies will receive a one-off special bonus of 3% – 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. Maturity and claim values shown will generally be higher than last year.

Withdrawal (surrender) values will also typically increase due to the additional Annual Bonuses and ageing of the policy.

Please note, withdrawal 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 slightly ahead of expectations,
  • Good returns were driven by returns on global equities (shares).
  • Australian medium-to-long-term bond yields ended the year slightly higher than 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 largely maintain bonus rates and apply a one-off special bonus for 2026.
 

Additional resources

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New contact centre phone numbers

We’ve introduced two new dedicated contact centre numbers for Super and Investment & Insurance (Wealth Protection) to simplify the experience for both customers and advisers.

These dedicated numbers streamline call options, making it easier to connect with the right specialist and reducing the time taken to reach a skilled agent.

Our dedicated retirements products (Term and Lifetime Annuities) are serviced through the 13 57 22 number while the existing 133 731 number will continue to support Claims-related enquiries.

These changes went live on 27 March.

New online Third Party Authority form

A standard online Third Party Authority (TPA) form has been added to the Resolution Life Australia website to provide a clear, consistent, and efficient way for customers to request the addition of a TPA to their account. This single form supports all written TPA requests, including those for family members, legal representatives, and advisers, helping to streamline the process and reduce handling time.

The form is available under the ‘Find a Form’ tab and is titled “Third party authority to release information.”

Access the form here: New Third Party Authority - Online Form 

Submission of this form automatically creates a case for approval. Once approved, our administrative team will issue the approval letter and provide the latest Annual Statement and/or Plan Summary, ensuring customers and authorised parties receive timely and complete information.

Supporting your 2025–26 EOFY client conversations

As we approach the final weeks of the 2025–26 financial year, we understand your primary focus is ensuring clients maximise their tax deduction opportunities while having all the necessary documents in place for a seamless tax experience. 

To support these conversations, we’ll be contacting eligible clients regarding their superannuation contributions before EOFY. Our goal is to highlight the important role super plays in retirement while highlighting potential tax benefits, which may complement the advice you provide.

Over the coming weeks, clients will receive digital communications focusing on:

  • The importance of incremental contributions: Encouraging clients to consider how smaller top-ups can build momentum and outlining the benefits of long-term compounding.
  • Notice of Intent: A reminder that the ‘Notice of Intent’ form needs to be completed and acknowledged by Resolution Life prior to lodging a tax return – an essential step for clients seeking tax deductions.
  • Key Deadlines: We have advised clients that for funds to be processed within this financial year, payments must be received by Thursday 25 June 2026.

For additional support with your EOFY client reviews, you can access our latest retirement guides. These guides provide helpful direction and steps to consider when planning for retirement. You might find our “How much super should I have” article helpful as an age-based reference guide for your clients' superannuation targets.

Important information

Where the information on this website is factual information only, it does not contain any financial product advice or make any recommendations about a financial product or service being right for you. Any advice is provided by Resolution Life Australasia Limited ABN 84 079 300 379, AFSL No. 233671 (Resolution Life), is general advice and does not take into account your objectives, financial situation or needs. Before acting on this advice, you should consider the appropriateness of the advice having regard to your objectives, financial situation and needs, as well as the product disclosure statement and policy document for the product. Any guarantee offered in the product is only provided by Resolution Life. Any Target Market Determinations for our products can be found at resolutionlife.com.au/target-market-determinations. 

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.com.au/contact-us or by calling 133 731.