Understanding the NZ Market Amidst Global Uncertainties

Image Source : Krish Capital Pty Ltd

Index Update: On 3rd April 2025, NZX 50 ended higher amidst macro-economic uncertainties. On the same day, S&P/NZX 50 Index witnessed a rise of 0.15% to end the session at 12,338.570 and S&P/NZX 20 Index rose by 0.10% to 7,299.190. Notably, significant buying was witnessed in the IT sector and S&P/NZX All Information Technology rose by 1.80% to 2,931.000. However, S&P/NZX All Financials encountered a fall of 2.06% to 1,357.270.  

Macro Update: The household net worth showed little change in the December 2024 quarter, reflecting a rise of $834 Mn to $2,440 Bn, as per Stats NZ. The total household assets increased $4.3 Bn (or 0.2%) in the December 2024 quarter. A rise in financial assets was partly offset by a decline in non-financial assets. Notably, a rise in total financial assets of $11.2 Bn (or 0.7%) was because of increases in household deposits (up $6.5 Bn or 2.5%) and household insurance and pension assets (up $4.7 Bn or 2.8%).   

Top Market Movers: Among top gainers, AoFrio Limited (NZX: AOF) witnessed a rise of 5.77% to $0.11 per share. On the other hand, New Talisman Gold Mines Limited (NZX: NTL) declined by 10.96% to $0.065 per share. 

Commodity Update: The dollar weakened broadly on Thursday, and the euro gained strength after President Donald Trump announced aggressive tariffs, including a 10% baseline on all U.S. imports, effective April 9, targeting around 60 countries. This move raised concerns about a global trade war, potentially reducing demand for crude oil. In commodities, gold rose 0.05% to $3,167.55, silver fell 2.22% to $33.88, and copper decreased 1.33% to $9,565.50. Brent oil dropped 2.63% to $72.98 per barrel, reflecting fears of economic slowdown due to escalating trade tensions. The market reacted sharply to the unexpected trade policy shift. 

Source: Trading View, Analysis: Kalkine Group   

After penetrating the upward trendline that had been in place since November 2024 and exhibiting signs of weakness, the S&P/NZX 50 index continues to break below a key support level marked by the neckline of a Head & Shoulders pattern, indicating the possibility of further declines. This downward pressure could drive the index toward strong support around 11,500 points before any signs of recovery emerge. Although the index is currently experiencing a slight rebound, it remains below the broken trendline, which could signal a continuation of the short-term downtrend. Moreover, the 14-day Relative Strength Index (RSI) remains below its midpoint, reinforcing a bearish short-term market sentiment.   

Our Stance: It could be said that significant buying in the IT sector somewhat supported the broader NZ market on 3rd April 2025. As of now, the investors’ sentiments are expected to be impacted by Trump's tariffs news. While the worries related to the trade war might impact the risky assets, the investors are required to be cautious in current circumstances. Notably, the investors seem to be worried about what’s next for the global economy and how the interest rates will look like. Moving forward, the US markets might also be impacted by the macro-economic factors. Notably, on 10th April, the consumer price index data is expected to be released.