Image Source: Krish Capital Pty Ltd

Index Update: On 18th December 2024, the NZ market ended in red amidst broad-based decline. On the same day, S&P/NZX 50 Index witnessed a decline of 0.38% to end the session at 12,865.550 and S&P/NZX 10 Index fell by 0.43%. S&P/NZX 20 Index fell by 0.38%. S&P/NZX All Health Care encountered a fall of 0.99%. However, energy sector witnessed significant buying and S&P/NZX All Energy increased by 4.42%.

Macro Update: As per Stats NZ, New Zealand’s seasonally adjusted current account deficit narrowed by $0.9 Bn to $6.2 Bn in the September 2024 quarter. During the same period, the seasonally adjusted goods deficit narrowed by $0.7 Bn to $1.9 Bn, driven by a $0.8 Bn fall in goods imports. In the September 2024 quarter, NZ imported fewer cars compared to the last quarter. Also contributing to the fall was transport equipment imports with no defence aircraft imported, which were recorded in the June 2024 quarter.  

Top Market Movers: Among top gainers, Foley Wines Limited (NZX: FWL) witnessed a rise of 11.54% to end the session at NZ$0.58 per share. On the other hand, Rua Bioscience Limited (NZX: RUA) fell by 15.00% to close at $0.034 per share.

Commodity Update: The U.S. dollar reached new highs against the Australian and New Zealand dollars on Wednesday as traders anticipated an upcoming U.S. interest rate cut. In the commodities market, gold inched up by 0.01% to $2,662.50 per ounce, while silver dropped 0.04% to $30.91, and copper fell 0.22% to $8,989.50 per ton. Oil prices were stable, with Brent crude rising 0.16% to $73.31 per barrel. Market sentiment was cautious ahead of interest rate cuts, while U.S. inventory data offered mixed signals. Concerns about weakening demand in China and a potential supply glut dampened oil's recent momentum.

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. Moreover, since the break-out, the index has been forming higher highs and higher lows, reinforcing the ongoing uptrend. Furthermore, 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 broader NZ market was impacted by decline in healthcare sector. While the win of Trump in the Presidential elections supported the risky assets, the market players are now looking for further cues. Therefore, the market participants are expected to closely watch the commentary from the Fed officials related to the health of the US economy. The global economic outlook is expected to influence the performance of NZ equities moving forward. Also, on 19th December, Stats NZ would be releasing data about gross domestic product (September 2024 quarter).

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