Market Close: NZ shares fall as pandemic fears remain heightened

New Zealand shares fell as weaker-than-expected data added to resurgent fears about the covid-19 pandemic. Air New Zealand dropped on a dire earnings outlook.

The S&P/NZX 50 Index dropped 109.03 points, or 1 per cent, to 11,225.28. Within the index, 31 stocks fell, 15 rose, and four were unchanged. Turnover was $151.2 million.

The benchmark gave back some of the previous session's 3.5 per cent surge after Stats NZ figures showed gross domestic product shrank 1.6 per cent in the March quarter, more than some economists were predicting. A much bigger hit to economic activity is expected in the June quarter.

Asian stock markets and Wall Street futures were weaker as new coronavirus infections caused China to cancel flights, shut schools and block off more neighbourhoods to contain a sudden coronavirus outbreak. New coronavirus infections also hit record highs in six US states.

Peter McIntyre, an investment adviser at Craigs Investment Partners, said equity markets had been rising fast and were now slowing down as investors searched for a steady footing.

"Markets have been rushed up pretty quick, so they are probably trying to find a settled market valuation," he said.

McIntyre said he expected the NZX 50 would land somewhere between 10,500 and 11,000. With the market sitting well above 11,000, a pullback was not unexpected.

Tourism Holdings led the local market down as it shed 6.5 per cent to $2. McIntyre said the company had rallied after it announced a restructuring some weeks ago but may be falling today on the news that new covid-19 cases had been found in New Zealand.

Air NZ dropped 5.7 per cent to $1.56 after it forecast an underlying loss of up to $120 million in the June year, down from a $374 million profit in 2019. That was before more than half a billion dollars of one-off costs.

"It had showed a lot of resilience in trading recently but in the cold light of day you can see things are very tough," McIntyre said.

The airline has a government loan facility of $900 million which it is yet to call on and said it is assessing its capital structure.

Auckland International Airport fell 3 per cent to $6.55.

Operating updates from Meridian Energy and Contact Energy showed strong performances in hydro-generation and in the retail market. Despite that, energy stocks joined the market decline.

Genesis Energy dropped 3.2 per cent to $3.05, Trustpower fell 2.6 per cent to $7.11, Mercury NZ decreased 2.5 per cent to $4.77, Meridian Energy slipped 2 per cent to $4.89 and Contact Energy was down 0.9 per cent at $6.37.

Z Energy declined 1.3 per cent to $2.91. The company told shareholders at today's virtual annual meeting that the fuel retailer wouldn't pay dividends until the 2022 year due to depressed market conditions. Fuel volumes are down 7 per cent from pre-covid levels.

Pushpay Holdings, which also held its annual general meeting today, rose 8.8 per cent to a record $8.15 after it increased its profit guidance by US$2 million. McIntyre noted a lot of brokers had increased their target prices on the stock.

A2 Milk rose 2.6 per cent to a record $20.85, building on its 7 per cent jump yesterday. The stock is set to be included on the S&P/ASX 50 Index from Monday. Investors are taking up positions in the Kiwi milk marketer ahead of its inclusion.

Outside the NZX 50, car retailer and wholesaler Turners Automotive jumped 11.1 per cent to $2.20 after it declared a final dividend of 6 cents. The company reported an 11 per cent improvement in underlying profit driven largely by solid performances across its finance and credit management businesses.