New Zealand shares snapped a three-day rally, as investors grew concerned about deteriorating US-China relations and the economic cost of a resurgence of Covid-19.
The S&P/NZX 50 Index declined 105.46 points, or 0.9 per cent, to 11,505.06. Within the index, 16 stocks fell, 24 rose, and 10 were unchanged. Turnover was $214.9 million.
The benchmark started the day on a positive note but dropped when the Australian market opened at midday. Australian shares were weaker as surging Covid-19 cases forced investors to consider the possibility of a second round of economic damage.
Asian share markets were further discouraged by mounting tensions between the United States and China. Overnight, US Secretary of State Mike Pompeo said the US would impose visa restrictions on Chinese firms that he accused of facilitating human-rights violations.
Grant Williamson, a director at Hamilton Hindin Greene, said it was a surprise to see the market weaker after a strong lead from Wall Street.
The local market started off okay, despite heavyweights A2 Milk and Fisher & Paykel Healthcare being weaker, but came off the boil when Australia opened, Williamson said.
"As it stands at the moment the market has given back everything it made yesterday," he said.
The benchmark was weighed down by its two largest stocks. A2 Milk dropped 3.8 per cent to $20.26 and F&P Healthcare declined 3.5 per cent to $35.90.
The two stocks - which together comprise close to a third of the index - dragged the NZX 50 lower despite a majority of stocks trading higher.
Williamson said F&P Healthcare had been trading at very high prices with investors periodically choosing to take some profit and knocking the stock a few per cent lower.
A2 Milk was likely weaker due to the US and Australia's jittery relationship with China.
"Tensions seem to be mounting there and A2 is a very big supplier of baby formula into the Chinese market," Williamson said.
Pushpay Holdings led the market lower, falling 3.9 per cent to $8.20. The stock is also trading near its record high and investors may have taken some profit.
Williamson said trading was "a mixed bag" with no clear patterns emerging in the sectors.
Among stocks considered vulnerable to virus outbreaks, Tourism Holdings fell 2.8 per cent to $1.75, SkyCity Entertainment Group dropped 1.2 per cent to $2.49, while Air New Zealand rose 2.7 per cent to $1.34.
Vista Group International jumped 7.2 per cent to $1.34, posting the day's biggest gain. The stock may still be benefiting from excitement around a potential Covid vaccine, Williamson said.
Energy stocks were largely stronger as investors took advantage of the recent selloff in the wake of Rio Tinto's announcement that it planned to close the Tiwai Point aluminium smelter next year.
Vector gained 2.7 per cent at $3.78, Genesis Energy rose 1.4 per cent to $2.98, Meridian Energy was up 1.3 per cent $4.60 and Contact Energy increased 0.5 per cent to $5.75. Trustpower fell 0.3 per cent to $6.91.
Retirement stocks were mixed. Summerset Group Holdings dropped 0.5 per cent to $7.31, Metlifecare held at $5.90 and Oceania Healthcare rose 2 per cent to $1.02.
Outside the top 50, Michael Hill International rose 9.7 per cent to 34 cents. The company today reported a robust return to trade with adjusted same-store sales for the quarter down just 4.1 per cent against prior year. Same stores sales for the year were up by 2.7 per cent.
Wine maker Delegat Group today reported unaudited profit after tax for the June year rose 37 per cent to $64.1m. Its shares rose 0.9 per cent to $12.85.