Broader NZ Market Closes Higher

Image Souce: Krish Capital Pty Ltd

Index Update: On 24^th October 2024, the broader NZ market ended in green amidst buying in the financials sector. On the same day, S&P/NZX 50 Index witnessed a rise of 0.21% to end the session at 12,814.070 and S&P/NZX 20 Index rose by 0.22%. Also, S&P/NZX 10 Index encountered an increase of 0.44% to 13,015.950. S&P/NZX All Financials witnessed a rise of 1.94% to end the session at 1,667.510.

Macro Update: As per the release by RBNZ dated 24^th October, low and stable inflation is again in sight. In NZ, consumer price inflation is now at 2.2%, converging on the midpoint of the 1 - 3% target range.  According to Governor Adrian Orr, navigating monetary policy, with the 1 to 2-year lag between policy action and ultimate outcome, is akin to ocean circumnavigation. Notably, the interest rates are becoming less restrictive and the economic activity is being revitalised.

Top Market Movers: Among top gainers, Cooks Coffee Company Limited (NZX: CCC) witnessed a rise of 9.62% to end the session at $0.285 per share and Promisia Healthcare Limited (NZX: PHL) rose by 8.00% to $0.405 per share. On the other hand, AoFrio Limited (NZX: AOF) declined by 10.38%.

Commodity Update:  The U.S. dollar approached a three-month high against major currencies, driven by expectations of a slower pace of interest rate cuts by the Federal Reserve and rising speculation about a potential second Donald Trump presidency. In the commodities market, gold rose 0.23% to $2,735.70 per ounce, silver climbed 0.59% to $34.03 per ounce, and copper increased 0.63% to $9,570.00 per ton. Brent crude futures gained 1% to $75.72 a barrel amid heightened tensions between Israel and Iran. Meanwhile, oil prices fell on Wednesday due to higher-than-expected U.S. crude stockpiles, with upcoming business activity data closely watched.

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 key resistance level at 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 high. Moreover, the index recently surpassed its previous peak, providing more support to the previous recommendation. Additionally, the 14-day Relative Strength Index (RSI) is trading above its midpoint, indicating positive market sentiment in the short term.

Our Stance: It could be said that the NZ market was helped by the buying in the financials sector. Moving forward, the geopolitical worries and the results of the US elections are some of the important factors which might influence the global and NZ equities. While the treasury yields rose, investors are required to assess macroeconomic developments before taking investment decisions. Also, the earnings reports are likely to affect the US markets.