Broader NZ Market Encounters Sharp Decline

Image Source : Krish Capital Pty Ltd

Index Update: On 28th May 2025, the broader NZ market ended the trading session significantly lower amidst selling in the financials sector. On the same day, S&P/NZX 50 Index witnessed a decline of 1.75% to 12,362.260 and S&P/NZX 20 Index fell by 1.86% to 7,300.460. Also, S&P/NZX 10 Index encountered a fall of 2.47% to 12,148.770. Also, S&P/NZX All Financials witnessed a significant fall of 4.90% to 1,423.870.   

Macro Update: As per Fortnightly Economic Update dated 23rd May, on the domestic side, the unemployment rate stood at 5.1% in the March quarter, coming in the lower end of the market expectations as well as below the Budget Update forecast of 5.4%. However, the underlying dynamics have been suggesting that firms are adjusting to weak demand via a reduction in the workers’ hours.   

Top Market Movers: Among top gainers, EROAD Limited (NZX: ERD) witnessed a rise of 18.42% to end the session at $1.35 per share. On the other hand, Metro Performance Glass Limited (NZX: MPG) declined by 9.26% to $0.049 per share.  

Commodity Update: The dollar held firm on Wednesday as upbeat U.S. economic data and expectations for strong tech earnings lifted sentiment. Easing trade tensions between the U.S. and Europe and calmer global bond markets added to the optimism. U.S. consumer confidence exceeded forecasts ahead of key jobs data. Gold rose 0.01% to $3,328.35, silver gained 0.33%, copper dipped 0.20%, and Brent crude increased 0.73% amid tighter Venezuelan export restrictions.

Source: Trading View, Analysis: Kalkine Group  

Following a recent upward rally, the S&P/NZX 50 index encountered resistance as it approached an important ascending trendline that has been in place since October 2023. This trendline, which had previously supported the broader bullish trend, acted as a turning point, prompting a reversal in the index’s direction. In the sessions that followed, the index penetrated a notable support level near 12,400 points - previously established as the peak in March 2025 - alongside a breach of the trend following indicator 50-day SMA, suggesting a shift toward stronger downward momentum. Moreover, the 14-day Relative Strength Index (RSI) fell below its midpoint in the latest trading session, indicating a negative market sentiment in the short-term.  

Our Stance: It could be said that the decline in financials sector somewhat impacted the broader NZ market on 28th May. As per the recent FEU, the volatility in financial markets due to evolving US trade policy can impact the global demand. However, the lower interest rates and policies to promote investment are expected to be supportive over the coming year. That being said, the investors are required to maintain a cautious stance amidst volatile commodity and global markets.