Image Souce: Krish Capital Pty Ltd

Index Update: On 4th November 2024, the NZ market ended in green as significant buying was encountered in the Communications Services sector. On the same day, S&P/NZX 50 Index witnessed a rise of 0.25% to end the session at 12,590.600 and S&P/NZX 20 Index increased by 0.20% to 7,600.300. Also, S&P/NZX 10 Index encountered a rise of 0.38% to 12,785.370. Also, S&P/NZX All Communications Services rose by 1.31% to 2,320.950 and S&P/NZX All Industrials increased 0.75%.  

Macro Update: Recently, RBNZ stated that geopolitical risk might disrupt international trade, weaken domestic demand as well as lead to financial market volatility. This could result in increased loan defaults, higher funding costs, and increase cyber risks for financial institutions. The nature of the impact would be dependent on the transmission channel, severity as well as location of the geopolitical shock. The banks also identified actions they can adopt in response to the scenarios to rebuild capital positions. The responses included reducing dividends, cutting costs, tightening lending standards, repricing as well as extending loan terms for existing customers. 

Top Market Movers: Among top gainers, Enprise Group Limited (NZX: ENS) witnessed a rise of 15.79% to end the session at $0.55 per share and Serko Limited (NZX: SKO) rose by 6.25% to $3.74 per share. On the other hand, Cooks Coffee Company Limited (NZX: CCC) declined by 10.71%.  

Commodity Update: The dollar weakened in Asia on Monday as investors prepared for potential shifts in the global economy with the upcoming U.S. elections and anticipated interest rate cuts. This could significantly impact bond yields. In commodities, gold dipped 0.02% to $2,748.50 per ounce, while silver fell 0.06% to $32.65. Conversely, copper rose 0.54% to $9,601.50 per ton. Brent crude futures increased by 1.5% to $74.23 a barrel after OPEC+ announced a delay in a planned output hike, citing weak demand pressures. Investors are now focused on the election for further insights this week. 

 

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. While currently experiencing a minor pullback, the index continues to form higher highs and higher lows, reinforcing the ongoing uptrend. Furthermore, the 14-day Relative Strength Index (RSI) is oscillating between 40 and 60, indicating a neutral short-term market sentiment. 

Our Stance: It could be said that the broader NZ market was supported by the buying in the Communications Services sector. In this week, the investors are required to track several economic updates such as the US Presidential elections, Federal Reserve meeting and the earnings results. All these factors might result in increased volatility in the equities. The meeting of the US Fed might provide some insights about the rate cuts and broader health of the US economy.  

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