NZ Market Closes Lower Amidst Sell-off in IT Sector

Image Source : Krish Capital Pty Ltd

Index Update: On 4th March 2025, the broader NZ market closed lower amidst decline in the IT sector. On the same day, S&P/NZX 50 Index witnessed a decline of 0.64% to end at 12,469.710 and S&P/NZX 10 Index encountered a fall of 0.59% to close at 12,311.170. Also, S&P/NZX 20 Index fell by 0.64%. S&P/NZX All Information Technology witnessed a decline of 2.12% to close the session at 2,908.610. However, S&P/NZX All Real Estate increased by 0.36%.  

Macro Update: As per Stats NZ, in January 2025, the seasonally adjusted number of new dwellings consented witnessed a rise of 2.6%, after falling 5.6% in December 2024. In the year ended January 2025, the actual number of new dwellings consented stood at 33,812, down by 7.2% from the year ended January 2024. The annual value of non-residential building work consented amounted to $8.9 Bn, down 9.7% from the year ended January 2024. 

Top Market Movers: Among top gainers, WasteCo Group Limited (NZX: WCO) witnessed a rise of 9.09% to end the session at $0.024 per share. On the other hand, ikeGPS Group Limited (NZX: IKE) declined by 8.24% to $0.780 per share. 

Commodity Update: The Canadian dollar and Mexican peso remained near their lowest levels in a month on Tuesday, driven by fears of a trade war after U.S. President Donald Trump announced 25% tariffs on goods from both countries. Trump stated that there was "no room left" for a deal unless fentanyl flows into the U.S. were curtailed. In commodities, gold dropped 0.12% to $2,897.80, silver fell 0.55% to $32.13, and copper slid 0.35% to $9,377.80. Brent crude oil declined 0.75% to $71.08, as markets reacted to Trump’s pause in military aid to Ukraine and tariff threats. Investors are watching upcoming NFP data. 

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 crucial resistance level set by 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 peak. Despite the ongoing correction, the index is bouncing back above the key support level defined by the 2023 high and the pattern’s neckline, reinforcing expectations of a sustained uptrend. Additionally, the 14-day Relative Strength Index (RSI) is reversing from its oversold territory, signaling a potential rebound in the near future.  

Our Stance: It could be said that decline in the IT sector weighed over the broader NZ market on 4th March 2025. As of now, the broader global markets are being impacted by the Trump’s tariff announcements. These macro-economic worries can impact the investors’ risk appetite. Furthermore, RBNZ recently stated that consumer price inflation in NZ is projected to be volatile over the near term because of the lower exchange rate as well as higher petrol prices. Therefore, the investors are required to regularly track the macro-economic releases moving forward.