Selling in the Materials Sector Weighs Over NZ Market

Image Source : Krish Capital Pty Ltd

Index Update: On 26th May 2025, the broader NZ market ended the trading session in red amidst significant selling in the materials sector. On the same day, S&P/NZX 50 Index witnessed a decline of 0.39% to end the session at 12,547.220 and S&P/NZX 20 Index fell by 0.44% to 7,421.090. Also, S&P/NZX 10 Index encountered a decline of 0.25%. Notably, S&P/NZX All Materials witnessed a significant fall of 2.01% to 984.810. However, S&P/NZX All Consumer Staples encountered a rise of 1.13%.   

Macro Update: On 22 May 2025, The Treasury released Budget Economic and Fiscal Update 2025. The economic outlook remains positive despite the broad-based global trade uncertainty. As per the release, after the sharp contraction in 2024, the economy continues to witness growth momentum, thanks to the export sector. However, the Budget forecasts assume that growth in NZ’s major trading partners would be averaging 2% in the upcoming 2 years and 2.3% thereafter, below the 3.3% average witnessed over the previous two decades.   

Top Market Movers: Among top gainers, EROAD Limited (NZX: ERD) witnessed a rise of 13.83% to end the trading session at $1.07 per share. On the other hand, WasteCo Group Limited (NZX: WCO) declined by 18.18% to $0.018 per share.   

Commodity Update: The euro and U.S. dollar rose against the yen and Swiss franc after Trump extended the EU tariff deadline to July 9, easing tensions. Gold fell 0.55% to $3,375.89, silver rose 0.22% to $33.682, and copper gained 0.82% to $4.8763. Brent crude edged up 0.02% to $64.22 in Asian trading, though gains were limited due to ongoing concerns about a potential OPEC+ production increase in July.  

Source: Trading View, Analysis: Kalkine Group   

Following a recent pullback, the S&P/NZX 50 surpassed its previous high of 12,400 points and moved above the 50-day simple moving average — a key indicator of trend direction — signalling a potential recovery. Despite experiencing the recent minor correction, the index remains above the 12,400 level, suggesting the recovery trend is still intact. Additionally, the 14-day Relative Strength Index (RSI) is holding above its midpoint, reflecting continued positive market sentiment.  

Our Stance: It could be said that decline in materials sector somewhat impacted the broader NZ markets on 26th May 2025. As of now, it seems that the President Trump’s delay of EU tariffs has provided the much-needed relief. Moving forward, the NZ markets are expected to be influenced by the global trends. The investors are required to keep a close watch on minutes of Fed's May FOMC meeting, which would be released on 28th May. Also, data about initial jobless claims is expected to be released on 29th May, which might affect the broader macro-economic indicators.