NZ Market Ends in Red

Image Souce: Krish Capital Pty Ltd

Index Update: On 25^th October 2024, the broader NZ market closed lower amidst the selling in materials sector. On the same day, S&P/NZX 50 Index witnessed a decline of 0.33% to end the session at 12,771.610 and S&P/NZX 20 Index fell by 0.32% to 7,718.900. Also, S&P/NZX 10 Index encountered a fall of 0.25%. S&P/NZX All Materials witnessed a decline of 1.99% to close at 1,100.580. However, S&P/NZX All Industrials rose by 0.40%.

Macro Update: As per the release by RBNZ, the NZ economy is in a position of excess capacity, encouraging price- and wage-setting to adjust to the low-inflation economy. Notably, lower import prices have assisted the disinflation. The economic growth is weak, mainly because of low productivity growth, but mostly because of weak consumer spending as well as business investment. However, some exporting businesses were supported by increased export prices, mainly in the dairy industry.

Top Market Movers: Among top gainers, NZ Windfarms Limited (NZX: NWF) witnessed a rise of 9.68% to end the session at $0.136 per share and Being AI Limited (NZX: BAI) rose by 6.12%. On the other hand, New Talisman Gold Mines Limited (NZX: NTL) witnessed a fall of 8.70%.

Commodity Update:  On Friday, the dollar pulled back from recent highs, aligning with a decline in U.S. Treasury yields. Despite this dip, the currency was set for another weekly gain, fueled by expectations of a slower Federal Reserve rate cut pace and growing speculation surrounding a potential second Trump presidency. In the commodities market, gold fell 0.28% to $2,741.20 per ounce, silver decreased 0.25% to $33.71, and copper was down 0.01% to $9,565.00 per ton. Meanwhile, Brent crude futures rose 0.6% to $74.83 amid ongoing tensions in the Middle East and upcoming Gaza ceasefire negotiations.

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 key resistance level at 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 high. Moreover, the index recently surpassed its previous peak, providing more support to the previous recommendation. Additionally, the 14-day Relative Strength Index (RSI) is trading above its midpoint, indicating positive market sentiment in the short term.

Our Stance: It could be said that the NZ market was impacted by the selling in materials sector. It seems that the increased treasury yields are impacting the sentiments of investors and broader equities. Moreover, the market experts believe that the corporate earnings are also impacting the global equity markets. Moving forward, the macroeconomic datapoints which are expected to be released next week might provide some idea about the health of the US economy.