New Zealand shares snapped a three-day rally in volatile trading, as investors continue to assess the fallout from the level 4 shutdown and as higher bond yields reduce the attraction of companies that typically pay a reliable dividend in ordinary times.
The S&P/NZX50 fell 75.74 points, or 0.8 per cent, to 9,556.73. Within the index, 20 stocks fell, 20 rose and four were unchanged. Turnover was $252.4 million.
While the local market opened stronger following a lively lead from Wall Street overnight, the trend turned downward throughout the day as further effects of the national shutdown became apparent.
"This is a remarkable event for many companies, so the market is trying to feel out how much of this is temporary and how much is permanent," said Matthew Goodson, managing director at Salt Funds Management.
Goodson said the volatility in markets was unprecedented, with Wall Street's S&P 500 falling 20 per cent in just 19 days. The S&P 500 extended its recent gain last night, when it closed up 6.2 per cent on the United States senate's approval of a US$2 trillion ($3.3t) fiscal stimulus package.
"This was the quickest fall into a bear market ever, but it only spent 11 days there before a 20 per cent gain in three days got us back out of it," Goodson said.
The NZX50 has itself climbed 12.4 per cent since Monday, when its recently slide stalled.
Utilities were weaker as higher bond yields reduced the attraction of companies that pay reliable dividends. The yield on the 10-year government bond has climbed to 1.12 per cent from 0.983 per cent at the close of trading on Monday.
"Bond yields are quite important given these are high yielding companies," Goodson said.
Telco-infrastructure provider Chorus led the market lower, falling 5.4 per cent to $6.55. It today affirmed its annual earnings guidance, and said it will put off $50m of capital spending due to the lockdown.
Lines company Vector fell 5.2 per cent to $3.31, and Auckland International Airport declined 4.6 per cent to $5.535.
Meridian Energy fell 3.4 per cent to $3.99, Contact Energy declined 1.8 per cent to $5.47, and Mercury New Zealand decreased 1.9 per cent to $4.25.
Fuel-retailer Z Energy fell 4.8 per cent to $2.75.
Property stocks were also under pressure after reports that large firms were putting landlords under pressure by refusing to pay rent through the lockdown.
Goodson said this was a concern to investors who had backed off some property stocks today, despite driving strong price growth during the week's rally.
Goodman Property Trust fell 2.3 per cent to $2.14 and Argosy Property declined 1.2 per cent to 85 cents.
Not all property stocks were weaker. Kiwi Property Group rose 3.5 per cent to 90 cents and Investore Property — which said it will only lose 0.5 per cent of revenue from lost rent — climbed 9.3 per cent to $1.64. Its manager Stride Property advanced 3 per cent to $1.39.
Kathmandu Holdings held at 86 cents after the company announced a significant number of its stores around the world would be temporarily closed due to shutdowns and it was undertaking "aggressive cost saving initiatives" including negotiating rent payments.
"Such a sudden stop to the revenue lines of many businesses has left customers whose balance sheets formerly looked okay, all of a sudden not looking so okay," Goodson said.
"That will be a key thing to keep an eye on in the market for the next couple of weeks."
Many stocks continued to rally from record lows despite the index being down on the day.
Tourism Holdings posted the day's biggest gain, up 10.1 per cent at $1.20. Sky Network Television climbed 9.1 per cent to 30 cents, Air New Zealand increased 1.1 per cent to 90 cents, and Vista Group International advanced 4.8 per cent to $1.30.
"The market, in some cases, was quite oversold. So the speed of the decline and the nature of the decline surprised a lot of market participants," Goodson said.
Synlait Milk rose 4.6 per cent to $5.52 and Fonterra Shareholders' Fund units increased 2.1 per cent to $3.88. A2 Milk fell 1.6 per cent to $16.46.