The sharemarket could be dragged downwards again today as investors digest more news about the latest Covid-19 lockdown and a further four cases in the community.
Sam Trethewey, portfolio manager at Milford Asset Management, said the big question for investors would be the duration of the lockdown.
"Will it be weeks or could it go on for a bit longer - into months? So the next few days are really critical to judge that."
Trethewey said the balance sheets of New Zealand's listed companies were in a lot better shape than they were in February/March last year - the last time New Zealand went into a nationwide level 4 lockdown.
"The impact shouldn't be nearly as severe given they are in a better place to sustain a period of no revenue."
Trethewey said last year Auckland Airport and Kathmandu's share prices were really knocked with shareholder value being lost when they had to raise new equity at very discounted prices.
"This morning we have had the news that it is Delta and another four cases. That is an incremental negative on what we knew yesterday so I wouldn't be surprised if we saw some more further reaction. But it is certainly not nearly as bad as we went through last year."
In February and March last year the NZX dropped sharply alongside markets around the world as global lockdowns took place. But within six weeks markets had bounced back as central banks and governments poured heavy stimulus into economies to keep them ticking over.
Late yesterday the S&P/NZX 50 index fell sharply to close down 0.67 per cent.
Trethewey said if the lockdown lasted just a week or two weeks it shouldn't affect the value of companies in the long run.
"If we are looking at a period of six months - as an extreme scenario - that really will start to test some of the balance sheets and potentially put us back in the situation of having some pretty nasty capital raisings."
But he pointed to parts of Australia like Queensland and Victoria which had gone hard and early and got the virus under control.
"There is a good chance we can contain it - and I think you would expect the market to reflect that."
The other major dynamic today is the Reserve Bank's monetary policy decision at 2pm.
"It will be very interesting to see how [Reserve Bank governor] Adrian Orr handles that if what has gone on in the past 12 -24 hours has any bearing on what they do today.
"The market was very much anticipating one 25 basis point of interest rate rises. You have since seen the Kiwi dollar fall in reaction and some of the rates and pricing pull back a bit."
Trethewey said the lockdown would "certainly make the RBNZ think twice about what they are doing".
"We had seen weakness in our interest rate sensitive yield stocks in the past week or so ahead of that decision. You could get a reversal of that."
Shane Solly, portfolio manager at Harbour Asset Management, said the businesses most impacted by the mobility restrictions would be anything that had an in person contact.
That included owners of physical retail like Kiwi Property which he said may need to provide rental support to retailers if the lockdown is extended as well as travel stocks Air New Zealand and Auckland Airport.
But he said there may also be relative winners.
"Increased online retail and logistics disruptions may be positive for Mainfreight. Health spend tends to get a boost – so Ebos may benefit."
Solly said My Food Bag had benefited from lockdowns in the past.
"In our view structural growth and defensive stocks can do relatively well through this period of slower but positive growth globally."
Solly said the retirement businesses may also continue to attract residents seeking safety and security.
"And defensive stocks like Spark and Contact may gain investor support as interest rate hike expectations wane."
Solly said the market had now priced in a more muted RBNZ reaction – with fewer rate hikes factored in and the NZ dollar falling.
"This is helping bond sensitive stocks like Contact and currency sensitive exporters like F&P Healthcare."