Macro-Economic Worries Weigh Over NZ Market

Image Source : Krish Capital Pty Ltd

Index Update: On 7th April 2025, the broader NZ market ended sharply lower amidst global worries due to the Trump administration’s tariff news. On the same day, S&P/NZX 50 Index witnessed a decline of 3.68% to close the session at 11,775.880 and S&P/NZX 20 Index fell by 3.74% to 6,980.800. Also, S&P/NZX 10 Index encountered a fall of 3.73% to 11,582.010. Also, significant selling was witnessed in the energy sector. S&P/NZX All Energy witnessed a decline of 6.74% to 1,612.440.  

Macro Update: As per Stats NZ, NZ household net disposable income witnessed a rise of 1.5% to $59.4 Bn in the December 2024 quarter. The main driver of the rise was an increase in the income of self-employed business owners, which went up by 6.5%. The rise in income to self-employed business owners was mainly from the businesses in agriculture, forestry, and residential rental property industries. Notably, the household spending rose 0.8% to $60.9 Bn in the December 2024 quarter.    

Top Market Movers: Among top gainers, 2 Cheap Cars Group Limited (NZX: 2CC) witnessed a rise of 2.78% to $0.74 per share. On the other hand, Santana Minerals Limited (NZX: SMI) declined by 11.82% to $0.485 per share. 

Commodity Update: On Monday, the yen and Swiss franc strengthened as investors fled to safe havens, while the risk-sensitive Australian dollar tumbled amid escalating trade tensions. U.S. President Donald Trump’s expanded tariffs deepened fears of a global recession. Commodities responded with gold rising 0.32% to $3,045.35, silver up 3.32% to $30.20, and copper gaining 2.17% to $8,940.00. Brent crude fell 2.63% to $63.93 as China and the EU signalled retaliation, intensifying global trade war concerns. 

Source: Trading View, Analysis: Kalkine Group   

After penetrating the upward trendline that had been in place since November 2024 and exhibiting signs of weakness, the S&P/NZX 50 index continues to break below a key support level marked by the neckline of a Head & Shoulders pattern, indicating the possibility of further declines. This downward pressure could drive the index toward strong support around 11,500 points before any signs of recovery emerge. Although the index is currently experiencing a slight rebound, it remains below the broken trendline, which could signal a continuation of the short-term downtrend. Moreover, the 14-day Relative Strength Index (RSI) remains below its midpoint, reinforcing a bearish short-term market sentiment.  

Our Stance: It could be said that the significant sell-off in the NZ market was mainly because of global worries associated with trade wars. The Trump administration’s announcement on tariffs has impacted the investors’ sentiments and risk appetite. As a result of immediate market fears, the global markets witnessed a sharp sell-off. The broad-based volatility highlights that global economic confidence remains in an uncertain state. As of now, investors are required to be watchful when it comes to equity investments.