NZ Market Witnesses Significant Buying

Image Souce: Krish Capital Pty Ltd

Index Update: On 8^th November 2024, the NZ market closed higher amidst broad-based buying momentum. On the same day, S&P/NZX 50 Index witnessed a rise of 1.50% to end the session at 12,770.330 and S&P/NZX 10 Index rose by 1.62% to close at 13,041.300. S&P/NZX 20 Index witnessed a rise of 1.50%. Also, S&P/NZX All Health Care encountered an increase of 3.00% and S&P/NZX All Communications Services rose by 2.65%.

Macro Update: The Treasury has released interim financial statements of the Government of New Zealand for 3 months ended 30 September 2024. On the YTD basis (ended September 2024), the core crown tax revenue stood at $28.7 Bn, which was close to forecast. Notably, the GST was $0.5 Bn (7.0%) below forecast consistent with the trend in seasonally adjusted value of retail electronic card transactions for the September 2024 quarter which was down for most of the retail industries.

Top Market Movers: Among top gainers, Bremworth Limited (NZX: BRW) witnessed a rise of 9.76% to end the session at NZ$0.45 per share and Pacific Edge Limited (NZX: PEB) rose by 6.16% to NZ$0.155 per share. On the other hand, Promisia Healthcare Limited (NZX: PHL) declined by 10.20% to NZ$0.44 per share.

Commodity Update: The dollar paused on Friday, poised for a slight weekly gain as markets assessed the potential economic impact of Donald Trump's possible return to the White House. Investors also eyed Beijing's conclusion of its five-day NPC meeting, expecting further details on China's stimulus measures, which could support the yuan and Antipodean currencies. Commodities showed mixed performance: gold dipped 0.01% to $2,605.70/oz, silver rose 0.12% to $31.90, and copper fell 0.42% to $9,645.50/ton. Crude oil slipped 0.3% to $75.44 a barrel, though was set for a positive weekly outcome due to OPEC+'s delayed production hikes and U.S. supply concerns.

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 trading above its midpoint, indicating a positive short-term market sentiment.

Our Stance: It could be said that the broader NZ market was supported by the buying witnessed in the healthcare sector. On the global front, the US Federal Reserve announced the 25-bps rate cut, as was expected by the market participants. As per the press release, the inflation has made progress toward the Committee's 2% objective but remains somewhat elevated. In considering some additional adjustments, the Committee would be carefully assessing incoming data, the evolving outlook, and the balance of risks. Moving forward, the broader NZ equity market is expected to be affected by the momentum in the global economy.