NZ Market Witnesses a Rebound

Image Source : Krish Capital Pty Ltd

Index Update: On 26th February 2025, the broader NZ market witnessed a rebound after significant selling pressure. On the same day, S&P/NZX 50 Index encountered a rise of 1.18% to end the session at 12,452.460 and S&P/NZX 20 Index rose by 0.98% to 7,458.080. Also, S&P/NZX 10 Index encountered a rise of 0.89%. Significant buying was witnessed in the materials sector and S&P/NZX All Materials increased by 5.55%.  

Macro Update: As per Stats NZ, for the year ended March 2024 (expressed in nominal terms), total tourism expenditure stood at $44.4 Bn, reflecting a rise of 14.6% ($5.6 Bn) from 2023 and international tourism expenditure increased 59.9% ($6.3 Bn) to $16.9 Bn, returning to levels similar to 2019 ($17.2 Bn). Notably, overseas visitor arrivals to NZ rose 44.8% to 3,183,376 and domestic tourism expenditure fell 2.5% ($697 Mn) to $27.5 Bn.  

Top Market Movers: Among top gainers, NZME Limited (NZX: NZM) witnessed a rise of 15.38% to end at $1.20 per share. On the other hand, Black Pearl Group Limited (NZX: BPG) declined by 7.5% to $0.74 per share. 

Commodity Update: The U.S. dollar weakened to an 11-week low against major currencies on Wednesday, pressured by declining short-term Treasury yields following weak economic data. The yen rose to its highest level since October as investor sentiment remained fragile amid fears of new tariffs from the Trump administration. The Canadian dollar hovered near a two-week low with additional tariffs set for next week. In commodity markets, gold surged 0.47% to $2,932.50, silver gained 0.97% to $32.13, and copper rose 0.70% to $9,472.50. Brent crude oil increased 0.40% to $73.29 after a report showed a drop in U.S. crude stockpiles. 

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 the buying in the materials sector supported the broader NZ market on 26th February. While the investors continue to track the earnings results from key companies, macro-economic indicators are required to be considered too. RBNZ stated that geopolitics, such as uncertainty regarding trade barriers, might weaken global growth. Also, global economic activity is likely to remain fragile over the medium term considering the increasing geoeconomic fragmentation.