Strong Buying in Consumer Staples Sector Supports Broad-based Momentum

Image Source : Krish Capital Pty Ltd

Index Update: On 1st May 2025, the broader NZ market closed the trading session in green amidst robust buying in the consumer staples sector. On the same day, S&P/NZX 50 Index witnessed a rise of 2.06% to end the session at 12,148.600 and S&P/NZX 20 Index rose by 2.12% to 7,180.150. Also, S&P/NZX 10 Index encountered an increase of 2.22% to end the session at 12,018.160. Notably, S&P/NZX All Consumer Staples witnessed a rise of 2.94% to 3,585.080.  

Macro Update: In the release dated 09 April 2025, it was mentioned that economic activity in NZ evolved largely as was anticipated since the February Monetary Policy Statement. Notably, the primary sector incomes and overall economic growth were helped by higher-than-anticipated export prices as well as a reduction in the exchange rate. However, the household spending and residential investment were weak.  

Top Market Movers: Among top gainers, NZ King Salmon Investments Limited (NZX: NZK) witnessed a rise of 14.29% to close the trading session at $0.24 per share. On the other hand, New Talisman Gold Mines Limited (NZX: NTL) declined by 5.75% to $0.082 per share. 

Commodity Update: The dollar steadied Thursday despite weak U.S. data, as hopes of easing trade tensions supported sentiment. The yen remained flat ahead of Japan's central bank meeting. Gold fell 2.12% to $3,248.80, silver slipped 1.11% to $32.17, while copper rose 0.68% to $9,176.20. Brent crude edged up 0.30% to $61.22 after prior losses sparked by potential Saudi supply increases and a Q1 contraction in the U.S. economy. 

Source: Trading View, Analysis: Kalkine Group   

Following a break below the upward trendline that had held since November 2024 and showing signs of weakness, the S&P/NZX 50 index has continued to fall beneath a key support level — the neckline of a Head & Shoulders formation — suggesting the potential for further downside. This bearish momentum may push the index toward a major support zone around 11,500 points. At present, the index is showing an early sign of stabilization when forming lower highs and higher lows. Moreover, the 14-day Relative Strength Index (RSI) is trading near the midpoint, providing more support to previous analysis. However, in order to signal a possible recovery, the index should manage to surpass its previous peak at 12,400 points. 

Our Stance: It could be said that the strong buying in the consumer staples sector somewhat supported the broader NZ market on 1st May 2025. As per the advance estimate released by the U.S. Bureau of Economic Analysis, the real GDP decreased at an annual rate of 0.3% in Q1 FY 2025. Moving forward, earnings from the renowned companies are expected to influence the broader global markets. However, investors are required to keep a close watch on the rate decisions as well as global headwinds, which can influence the capital markets.