NZ Market Closes Lower Amidst Broad-based Sell-off

Image Source : Krish Capital Pty Ltd

Index Update: On 28th March 2025, the NZ market closed in red amidst broad-based decline. On the same day, significant decline was witnessed in the energy sector. Notably, S&P/NZX 50 Index witnessed a decline of 0.15% to end the session at 12,287.460 and S&P/NZX 20 Index fell by 0.08%. Also, S&P/NZX 10 Index encountered a fall of 0.04% to 12,070.970. However, S&P/NZX All Information Technology witnessed significant buying and the index increased by 4.46%.  

Macro Update: The Treasury released interim financial statements of the Government of New Zealand for 7 months ended 31 January 2025. As per the release, the core crown residual cash deficit stood at $5.1 Bn, which was $0.7 Bn more than the deficit forecast and was mainly because of lower tax receipts. Notably, the net core crown debt of $180.6 Bn (42.8% of GDP) remained broadly in line with the forecast ($180.7 Bn or 42.8% of GDP). 

Top Market Movers: Among top gainers, Gentrack Group Limited (NZX: GTK) witnessed a rise of 10.84% to end the session at $11.45 per share. On the other hand, Promisia Healthcare Limited (NZX: PHL) declined by 6.85% to $0.34 per share.  

Commodity Update: The dollar dropped from a three-week high on Friday, while gold surged to a record high on Thursday, driven by new tariffs from President Trump's administration, expanding the trade war to autos. The tariffs sparked uncertainty in global markets, raising concerns about their impact on the economy and delaying potential Federal Reserve rate cuts. In commodities, gold rose 0.68% to $3,111.80, silver climbed 0.60% to $35.29, and copper fell 0.42% to $9,815.45. Brent oil held steady at $74.00 per barrel, maintaining a one-month high as investors prepared for U.S. reciprocal tariffs set to start next week. 

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. While the index is currently experiencing a minor rebound, it is approaching resistance at the 21-day SMA, which could lead to 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 decline in the energy sector impacted the broader NZ market on 28th March. Also, it seems that the investors have been grappling with the uncertainties related to the US President Donald Trump's tariff announcements. Moving forward, the broader global markets are expected to be impacted by the macro-economic news. Notably, data about ISM manufacturing is expected to be released on 1st April and data related to the initial jobless claims is anticipated to be released on 3rd April.