A double-digit decline in a2 Milk's first half net profit helped tip the sharemarket into correction territory after a moderate day's trading, but the over-riding influence on prices was the upward march of bond yields.
The S&P/NZX-50 index finished at 12,140.66, down 141.76 points or 1.15 per cent, and down 10.5 per cent from the market's peak in early January. There were 83 falls and 67 gains while the total amount of stock traded came to $198 million.
"I guess you could call it a correction but the key thing is rising bond yields," Salt Funds managing director Matt Goodson said.
"With 10-year yields up at 1.83 per cent, the yield-sensitive stocks and growth stocks have been under a bit of pressure," he said.
The market's decline was against the background of a generally strong reporting season in New Zealand and Australia.
Alternative dairy company a2 Milk dropped $1.79 or 16 per cent to $9.34 after reporting a 35 per cent decline in net profit to $120m and lowering its earnings guidance for the year to June, due to Covid-19 disruption of the daigou trade into China.
"The result for the six months was largely expected, but the guidance for the rest of the year has put it under the gun," Goodson said.
"With the retail daigou trading pretty much dead thanks to Covid-19, it should not come as a shock, but it does not necessarily mean that the business model its kaput," he said.
"For now we are just going to have to take it on trust that they can bottom this out, and that they will not have a big inventory overhang.
"It's still a very large, profitable business, but the outlook was nothing like what the market expected," Goodson said.
Shares in Synlait Milk - a2 Milk's sole supplier of infant formula - dropped by 21c or 4.9 per cent to $4.07.
The Warehouse rallied by 16c or 4.9 per cent to $3.40 after upgrading its earnings guidance.
The retail chain now expects its net profit to hit $110m in the first half to January 31, up from a previous guidance of $90m, and compared with a first half 2020 result of $46.2m.
Manuka honey company Comvita dropped by 12c or 3.6 per cent to $3.20, despite reporting a returning to profit in the first half to $3.5m.
The out-of-favour Fisher and Paykel Healthcare continued its decline, falling 74c or 2.5 per cent to $28.76.
Fletcher Building, a clear beneficiary of the return to cyclical stocks, rallied by 11c to $6.51.
Carpet maker Cavalier rallied by 8.5c or 26 per cent to 41c after reporting net profit of $4.3m, up $5.5m on the prior year, with a $3.0m improvement in underlying business performance and a $2.5m net gain on the sale and leaseback of the Auckland property.
Restaurant Brands lost 4c to $12.01 after reporting a steady annual net profit of $30.9m.
Power company Genesis gained 6c to $3.48 after reporting a sharp lift in net profit to $53m.