Broad-Based Sell-off Impacts NZ Market

Image Source : Krish Capital Pty Ltd

Index Update: On 24th February 2025, the broad-based sell-off impacted the NZ market. Notably, significant selling was witnessed in the materials sector. On the same day, S&P/NZX 50 Index witnessed a fall of 1.73% to end the session at 12,531.720 and S&P/NZX 20 Index declined by 1.91% to close at 7,509.710. Also, S&P/NZX 10 Index witnessed a fall of 1.57% to close at 12,407.250. S&P/NZX All Materials encountered a decline of 2.55% to end at 1,167.250.  

Macro Update: The total volume of retail sales in NZ rose by 0.9% in the December 2024 quarter as compared with the September 2024 quarter, as per Stats NZ. In the December quarter, there was a modest increase in retail activity, with growth throughout most industries. Notably, 10 of the 15 retail industries witnessed increased retail sales volumes in the December 2024 quarter as compared with the September 2024 quarter, post adjusting for price and seasonal effects.  

Top Market Movers: Among top gainers, Ventia Services Group Limited (NZX: VNT) witnessed a rise of 7.94% to close the session at $4.76 per share. On the other hand, WasteCo Group Limited (NZX: WCO) declined by 8.00% to end at $0.023 per share. 

Commodity Update: The euro strengthened on Monday following Germany’s expected election results, where opposition conservatives emerged victorious. Meanwhile, the U.S. dollar continued its downward trend amid growing concerns over the U.S. economic growth outlook. In commodities, gold held steady at $2,954.30, while silver rose by 0.11% to $33.05. Copper dropped by 0.15%, settling at $9,548.50. Brent crude oil slipped by 0.30% to $74.24, extending last week’s slight decline, as weaker-than-expected U.S. economic data fueled concerns over lower oil demand. Investors are focusing on upcoming GDP data this week for further economic insights. 

Source: Trading View, Analysis: Kalkine Group   

In July 2024, the S&P/NZX 50 index broke above both the neckline of a Head and Shoulders pattern on the daily chart and a crucial resistance level set by its 2023 high. This breakout suggests that the uptrend, which began in November 2023, is likely to continue and may drive the index toward its 2021 historical peak. Despite the ongoing pullback, the index remains above a key support level defined by the 2023 high and the pattern’s neckline, reinforcing expectations of a sustained uptrend. Additionally, the 14-day Relative Strength Index (RSI) is hovering near oversold territory, signaling a potential rebound in the near future.  

Our Stance: It could be said that the sell-off in the materials sector weighed over the broader NZ market on 24th February. As of now, it seems that the fears related to tariffs and inflation are impacting the investors’ sentiments. Recently, RBNZ stated that economic growth is anticipated to recover during 2025. Also, lower interest rates might encourage spending. However, elevated global economic uncertainty can impact business investment decisions. Amidst these uncertainties, the investors are required to have a cautious stance.