The New Zealand sharemarket dropped by 2.4 per cent in the opening minutes of trade after the Government put Auckland into level 3 lockdown following the discovery of four new Covid-19 cases overnight.
After 20 minutes of trading the S&P/NZX50 Index was down 304 points at 11,341.
"No stocks are up. The whole market is down," Craigs IP head of private wealth research Mark Lister said.
The NZX said its markets – as an essential service – would remain fully operational during the lockdown.
Among the movements, Auckland International Airport dropped 24c or 3.8 per cent to $1.37 while Air NZ fell 8.5c (6.1 per cent) to $1.29.
F&P Healthcare fell 75c or 2.1 per cent to $34.00 and Sky City dropped 14c or 5.5 per cent to $2.38.
Retirement village operator Summerset dropped 39c or 5.1 per cent to $7.20.
Power companies were not immune from the selling, with Meridian dropping 13c or 2.7 per cent to $4.65.
In offshore markets, Wall Street had been performing strongly until the last hour of trading as hopes of a new economic stimulus package faded.
The S&P 500 index finished down 0.8 per cent on a day while the tech-heavy Nasdaq Composite index ended down 1.7 per cent.
From midday today, Auckland will move to Alert level 3, meaning all but essential businesses must shut their doors, following the announcement from the Government last night of four cases of community transmission of Covid-19 in South Auckland.
Imre Speizer, senior market strategist at Westpac, said the New Zealand dollar largely held against the US dollar at US65.77c.
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Against the Aussie, the kiwi lost ground initially on the Covid news - falling from A92.3c to A91.80c before rebounding.
"The currency markets are not really reacting to the New Zealand Covid-19 story," Speizer said.
On the share market Fisher and Paykel Healthcare and a2 Milk were likely to provide some offset while those with a domestic focus will suffer, Shane Solly, Harbour Asset Management senior portfolio manager, said.
"Thirty per cent of our market is Fisher and Paykel Healthcare and a2 Milk, which both have an external focus," he said.
"They are global businesses based in New Zealand so they are less impacted by this," he said.
Similarly, another 30 per cent of the market is tied up with power generation, which would also not be directly affected.
"It certainly will not be great for the travel tourism stocks as it pushing out any recovery even longer," he said.
Meanwhile the financial markets are looking to today's monetary policy statement from the Reserve Bank for direction.
The official cash rate is widely expected to remain at 0.25 per cent but the central bank may choose to expand its bond buying programme, which currently sits at $60b.
ANZ said might it be increased to $90b.
Westpac's Speizer said there could by some "discussion" as to other possible tools that could be available to the central bank in order to soften the economic blow posed by the Covid-19 pandemic.