Image Source : Krish Capital Pty Ltd

Index Update: On 27th January 2025, the broader NZ market ended in red amidst decline in the industrials sector. On the same day, S&P/NZX 50 Index encountered a fall of 0.19% to close at 12,999.720 and S&P/NZX 20 Index fell by 0.30% to 7,790.040. Also, S&P/NZX 10 Index witnessed a decline of 0.17%. S&P/NZX All Industrials witnessed a decline of 1.44% to end the session at 2,272.570 and S&P/NZX All Energy fell by 1.03%. However, S&P/NZX All Health Care rose by 0.93%.  

Macro Update: As per Interim Financial Statements of the Government of New Zealand (For the five months ended 30 November 2024), core crown tax revenue stood at $49.3 Bn, which was in line with forecast. Also, core crown expenses were $57.8 billion, which were $0.2 Bn below forecast. Notably, net core Crown debt amounted at $181.7 Bn (43.1% of GDP), which was broadly in line with forecast net core Crown debt of $181.2 Bn (43.0% of GDP). 

Top Market Movers: Among top gainers, Synlait Milk Limited (NZX: SML) witnessed a rise of 16.00% to end the session at $0.58 per share. On the other hand, Metro Performance Glass Limited (NZX: MPG) declined by 6.45% to $0.058 per share. 

Commodity Update: The dollar strengthened on Monday as traders assessed the potential impact of U.S. President Donald Trump's tariff plans, with the Federal Reserve expected to keep interest rates steady this week. Last week, the dollar saw its weakest performance since November 2023, as concerns about tariffs eased, but those fears resurfaced after Trump announced plans to impose tariffs on Colombia. In commodities, gold fell 0.48% to $2,793.40, silver dropped 1.33% to $30.76, and copper declined 0.35% to $9,249.00. Meanwhile, Brent crude dropped 1.11% to $77.63 a barrel after Trump urged OPEC to cut prices amid measures to boost U.S. oil production. 

 

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. Since the breakout, the index has been forming higher highs and higher lows and bouncing off a short-term upward trendline established since June 2024 in the last trading session, reinforcing the prevailing uptrend. Meanwhile, the 14-day Relative Strength Index (RSI) is trading above its midpoint, reflecting positive market sentiment in the short-term.  

Our Stance: It could be said that the sell-off in the industrials sector impacted the broader NZ market sentiments on 27 January. Moving forward, in the current week, the broader US and global markets are expected to be affected by the earnings from the big and leading companies. Furthermore, the US Federal Reserve meeting is scheduled, which might decide the momentum of the broader markets. Amidst the tariff threats and uncertain macroeconomic conditions, the market players are required to be watchful when it comes to making investment decisions.  

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