Erin Mullavey, 42, was found dead by her husband Nicholas Gilbert late at night on Easter Sunday 2023 in her western Sydney apartment.
The husband's childhood friend - Morten Birkegaard Jensen - was arrested four months later and faced a NSW Supreme Court murder trial on Monday.
Prosecutor Monika Knowles said 35-year-old Jensen had been friends with Mr Gilbert since the two men were children.
Hours before he killed Ms Mullavey, Jensen was seen paranoid and agitated at a friend's place, speaking about witchcraft and a Nigerian witch doctor, Ms Knowles said.
"The accused said someone close to him had placed a curse on him," she told Justice Phillip Boulten as the judge-alone trial began.
Jensen was again agitated that afternoon at Mr Gilbert's home when Ms Mullavey called him homosexual and suggested he performed sexual acts for drugs.
That evening while at home, he was told Mr Gilbert or Ms Mullavey had sent his female friend threatening messages claiming she had stolen the designer bags and $20,000 in cash.
The threat related to an incident when the couple sought a buyer for some bags they had stumbled upon.
A buyer was not found, the bags disappeared and either Ms Mullavey or her husband used their shared phone to send threatening texts to the woman, who cannot be legally named.
Jensen was in custody at the time.
After learning about the dispute on Easter Sunday, the 35-year-old rode his bike to the nurse's Merrylands home to kill her, the court was told.
"Going to fix this now," he texted the woman.
There was no dispute Jensen stabbed Ms Mullavey that night, Ms Knowles told the court.
He switched clothes and took a train to a friend's place in Sydney's northern beaches where he stayed the night.
Eight days later, he admitted he had killed Ms Mullavey.
"She was bad, she was putting spells on us, I had to do it," he told his female friend.
"The universe told me to do it."
Jensen - whose neck tattoos showed above his prison-issued green top during the trial - pleaded not guilty to murder due to a claimed mental health impairment.
Two psychiatrists agree he was experiencing a psychotic event at the time, with one diagnosing the 35-year-old with schizophrenia and the other with drug-induced psychosis.
Public defender Tom Quilter SC urged Justice Boulten to agree with the psychiatrists and find his client not guilty.
Ms Knowles pressed a different finding, saying Jensen's beliefs in witchcraft and conspiracy theories could be cultural rather than due to mental health.
The 35-year-old's conduct after the killing, including by lying and covering up what he did, showed he knew what he had done was wrong, she said.
Another option available to Justice Boulten is finding Jensen guilty of the lesser charge of manslaughter due to a mental health condition substantially impairing his thinking.
The trial continues.
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