Market close: NZ shares fall as world waits on the Federal Reserve

Federal Reserve chair Jerome Powell. Photo / AP

New Zealand shares dipped, taking a lead from Wall Street as investors began taking profit on recent gains and before the US Federal Reserve makes its first economic forecasts since the pandemic struck.

The S&P/NZX 50 Index fell 38.17 points, or 0.3 per cent, to 11,260.52. Within the index, 10 stocks rose, 31 fell, and nine were unchanged. Turnover was $188 million.

Wall Street's upwards momentum subsided ahead of the Federal Reserve meeting. The Fed had shared a favourable outlook in December, when the coronavirus was largely unknown, but is now expected to paint a more dire picture at 6am NZT tomorrow.

Mark Lister, head of private wealth research at Craigs Investment Partners, said the meeting of the world's biggest central bank was likely to have a neutral impact on equity markets.

"The Fed is already throwing the kitchen sink at the issues," he said. "It is hard to see them doing a whole lot more than they already are, but still people will be analysing every word and phrase."

Share markets, fuelled by near-zero interest rates and massive government stimulus packages, have been steadily climbing in recent days but came off the boil overnight.

"I think it is nothing more scientific than we've had an outstanding run and it had to turn around at some point," Lister said.

The S&P 500 fell 0.8 per cent and the Dow Jones Industrial Average 1.1 per cent. The Nasdaq climbed a further 0.3 per cent after hitting a record the day before.

Asian markets were mixed, Australia's S&P 200 rose 0.4 per cent, Hong Kong's Hang Seng was up 0.1 per cent, but markets on mainland China fell half a per cent and Japan's Topix was down 0.2 per cent.

The local benchmark started the week with a bang, jumping more than 3 per cent on Monday and turning positive year to date. But it has walked back those gains and is now up just 1 per cent this week.

Kathmandu, which leapt more than 11 per cent on Monday, declined 4.4 per cent to $1.31.

Vista Group International fell 4.7 per cent to $1.82, New Zealand Refining Company dropped 4.2 per cent to 91 cents, Air New Zealand fell 4.1 per cent to $1.86 and SkyCity Entertainment Group declined 2.9 per cent to $3.05.

Lister said stocks which had staged an "impressive rebound" were now seeing some profit taking.

Skellerup Holdings fell 4.7 per cent to $2.02, leading the market lower but with just 43,000 shares traded.

Infratil dropped 4 per cent to $4.97 after raising $250m through an institutional placement priced at $4.76 per share to position the infrastructure investment firm to pursue its growth agenda and take advantage of any new opportunities.

Lister said there was likely an acquisition opportunity on the horizon.

"As a shareholder you don't want that money just sitting there - you want them to be putting that capital to work," he said.

Z Energy declined 1.3 per cent to $3.11. Fuel volumes for the week ended June 7 fell 1 per cent. The retailer said volume in the prior week had been elevated by a 10-cent discount offer going into the Queen's Birthday holiday weekend. Volumes for the week were down 30 per cent compared to pre-lockdown levels.

Fletcher Building said it has negotiated easier covenants with its bankers through to the end of 2021 in case they become necessary as the company navigates through the coronavirus crisis. If it does call on the easier covenants, Fletcher has agreed to forego dividends until it returns to its normal covenants. Its share price edged 0.3 per cent lower to $4.03.

Pushpay Holdings posted the day's biggest gain, up 3.3 per cent at $7.23. it was followed by logistics company Freightways which rose 2.7 per cent to $7.30.