Critical Decline in New Zealand Stock Market: US and China Data Awaited

New Zealand’s stock market fell 20.8 points, or 0.2%, to 11,631.3 in early trading on Tuesday, its second consecutive session of declines. The decline marks the lowest level since December 21. Traders are cautious ahead of inflation figures from the US and economic data expected from China.

In the US, consumer inflation expectations rose to 3.3% in April, the highest level in the last five months. This led investors to adopt a cautious stance. In addition, economic data from China is also expected to have a significant impact on the markets.

RBNZ Survey and Inflation Expectations

On the domestic front, the RBNZ survey showed that the inflation rate will decline from 3.2% to 2.73% in the next 12 months. This marks the lowest level since September 2021. The RBNZ is expected to keep the official cash rate at 5.5% next week to bring inflation back to its 1% to 3% target. This will be the seventh consecutive meeting to maintain the same rate.

Visitor arrivals to New Zealand increased by 27% in March, slowing from 35% growth in February. This was particularly felt in the energy, consumer staples and technology sectors. A2 Milk lost 1%, Meridian Energy 0.9% and Freigthways Group 0.6%.

Electronic card transactions declined by 0.4% m-o-m on a seasonally adjusted basis to NZD million in April 2024. As the decline in e-card spending entered its third month, lower spending on motor vehicles, clothing, accommodation, fuel, consumables and consumer durables contributed to the decline.

Visitor Arrivals to New Zealand

Visitor arrivals to New Zealand increased by 27.9% year-on-year to 340,306 in March 2024. The largest increases were seen in visitors from China, Australia, the United States, India, Korea and Japan. However, the number of overseas visitors arriving in March 2024 was 90% of the pre-COVID-19 level in March 2019.

Of the 340,300 overseas visitors arriving in March 2024, 39% came from Australia, 16% from the United States, 6% from the United Kingdom and 5% from China. The timing of the Easter holidays contributed to the increase in visitor numbers.

Conclusion and Expectations

The New Zealand stock market and economic data are influenced by both domestic and international factors. Data from the US and China will determine the volatility in the markets in the coming period. The steps taken by the RBNZ to control inflation and changes in tourist numbers will also have a significant impact on the economic outlook.