Broader NZ Market Ends Higher

Index Update: On 5th January, the broader NZ market ended in green amidst buying in the financials sector, with S&P/NZX All Financials rising by 2.46% to end at 1,654.120. On the same day, S&P/NZX 50 Index and S&P/NZX 20 Index witnessed a rise of 0.29% and 0.36%, respectively. Also, S&P/NZX 10 Index went up by 0.40% to close at 12,939.730. On the other hand, S&P/NZX All Materials fell by 1.80%.  

Macro Update: As per the FEU dated 19th December, the global central banks are moving towards neutral policy stances as the worries related to the persistently high inflation subside. While the risks of labour market weakness could induce further easing in the US, but in Australia, the labour market tightness and an increase in inflation might result in higher interest rate.  

Market Movers: Among top gainers, WasteCo Group Limited (NZX: WCO) witnessed a rise of 7.69% to end at $0.014 per share. On the other hand, Third Age Health Services Limited (NZX: TAH) declined by 6.75%.  

Commodity Update: The U.S. dollar began the first full trading week of the new year on a firm note, hitting a three-and-a-half-week high against the euro and strengthening versus sterling, while overall moves stayed modest. Sentiment was influenced by the U.S. capture of Nicolas Maduro. Gold surged 2.09% to USD 4,420.10, silver jumped 6.27% to USD 75.44, and copper climbed 2.62% to USD 12,844.00. Brent crude rose 0.30% to USD 60.90, as markets assessed Venezuela developments and OPEC+ keeping output unchanged amid geopolitical tensions. 

Source: Trading View, Analysis: Kalkine Group 

The S&P/NZX 50 Index posted a modest gain in the first trading session of the year, advancing 38.83 points, or 0.29%, to finish at 13,587.24. Despite this uptick, the index remains locked in a sideways consolidation, trading between its record high and a key support area linked to the 2024 peak. Technically, the near-term outlook continues to be constructive, underpinned by a well-defined pattern of higher highs and higher lows, with prices comfortably holding above important technical thresholds. Provided this primary support zone remains intact, the broader uptrend that has been in place since October 2023 is likely to persist. Immediate support is seen around 13,270, and sustained trading above this level is required to maintain bullish momentum and support another potential challenge of the all-time high. Conversely, a clear break below 13,270 would point to a deeper corrective move, with scope for a retracement toward the 13,000 area before the dominant uptrend resumes. 

Our Stance: As of now, precious metals continue to increase, while the oil witnesses a decline after the US captured Maduro, the president of Venezuela. The market experts believe that there might be heightened geopolitical worries as a result of this moving forward. Coming to NZ, the global momentum can impact the NZ equity markets. RBNZ, in the release dated 26 November, stated that the Committee highlighted that there are some early signs of stabilisation in labour demand.