NZ Market Encounters Robust Buying

Image Source: Krish Capital Pty Ltd

Index Update: On 20^th December 2024, the NZ market closed the session in green amidst broad-based buying. Also, NZ equities were supported by the significant buying in the financials sector. On the same day, S&P/NZX 50 Index increased by 1.18% to end the session at 12,904.110 and S&P/NZX 20 Index rose by 1.37% to close at 7,755.380. Also, S&P/NZX 10 Index witnessed a rise of 1.56%. S&P/NZX All Financials rose by 3.40% to end the session at 1,629.790.  

Macro Update: As per Stats NZ, kiwifruit exports were valued at $3.5 Bn for the 2024 season. The value of kiwifruit exports in the 2024 season rose by $1 Bn (or 44%) as compared with 2023. The kiwifruit season is typically from March to November. While the prices for kiwifruit remained relatively stable, the volume of kiwifruit produced this season drove the overall increase in exports. Kiwifruit made up 73% ($3,456 million) of fruit exports for the year ended November 2024, followed by apples, which represented 21% ($979 million).

Top Market Movers: Among top gainers, New Talisman Gold Mines Limited (NZX: NTL) witnessed a rise of 10.53% to close at $0.021 per share. On the other hand, ANZ Group Holdings Limited (NZX: ANZ) declined by 6.48% to $30.01 per share.

Commodity Update: On Friday, the U.S. dollar is set to close the week near a two-year high, driven by a hawkish outlook on U.S. interest rates. The Japanese yen, however, struggled, falling to a new low after the Bank of Japan kept rates steady and provided little clarity on future hikes. This followed the U.S. Federal Reserve’s indication of fewer rate cuts in 2025. In commodities, gold rose to $2,612.30, silver dropped 0.37% to $29.30, and copper gained 0.34% to $8,918. Oil prices remained stable, with Brent crude down 0.43% to $72.57, amid concerns over demand growth, particularly in China. 

Source: Trading View, Analysis: Kalkine Group

In July 2024, the S&P/NZX 50 index surpassed both the neckline of a Head and Shoulders pattern on the daily chart and a key resistance level marked by its 2023 high. This breakout indicates that the uptrend, which started in November 2023, is likely to persist and could push the index toward its historical peak from 2021. Additionally, in the most recent trading session, the index bounced off a short-term upward trendline established since June 2024, further confirming the prevailing uptrend. Meanwhile, the 14-day Relative Strength Index (RSI) remains above its midpoint, reflecting positive short-term market sentiment.

Our Stance: It could be said that significant buying in the financial sector supported the broader momentum in NZ equities on 20^th December.  The Federal Reserve is expecting fewer-than-expected interest rate cuts in the next year, which led to the recent sell-off in the global markets. The US Fed added that the Committee would be carefully assessing the incoming data, the evolving outlook, and the balance of risks when it comes to considering the extent and timing of additional adjustments to the target range for the federal funds rate.