New Zealand shares started May in a downbeat way as investors toned down the enthusiasm that drove the benchmark index's biggest monthly gain in four years.
The S&P/NZX 50 Index fell 83.06 points, or 0.8 per cent, to 10,449.01. Within the index, 28 stocks declined, 16 rose, and six were unchanged. Turnover was $132.9 million.
After a strong open following the long Anzac weekend, the local market dropped throughout this week as investors chose to lock in profits as April came to a close.
Mark Lister, head of private wealth research at Craigs Investment Partners, said investors were now taking stock after the record recovery.
"The NZX50 was up 7.5 per cent in April, which is the best month we've had in more than four years and the fourth strongest month in the history of the index," he said.
"Global share markets have had a substantial rally since the lows in late March, and our market has rebounded 23-odd per cent. So, global markets are due a breather after such a strong run and you are seeing that take place across the world really."
Wall Street followed a similar trend overnight, losing ground as investors locked in profits from the S&P 500's best month since 1987. The S&P 500 closed down 0.9 per cent, the Dow Jones fell 1.2 per cent and the Nasdaq Composite dropped 0.3 per cent.
The Australian S&P/ASX 200 Index was also down 3.4 per cent in late trading today.
Lister said it was hard to marry up the economic outlook - on the cusp of a severe recession which could push unemployment as high as 10 per cent - with a share market that is only down 8 or 9 per cent year-to-date.
"It does feel like maybe markets have rebounded a little too much, too quickly. Given the earnings and economic outlook," he said.
"Looking out one to two years I'm quite optimistic, but looking out one to three months I'm expecting a little bit of a pull back."
Vista Group International led the market lower, down 4.8 per cent at $1.19.
SkyCity Entertainment Group fell 4.1 per cent to $2.55 after the company warned of new delays to the construction of the convention centre and hotel site in Auckland.
The construction site was damaged last October when the partially completed roof caught fire. The government and SkyCity have agreed that Covid-19 is a "force majeure event," and the completion date has been extended to 2025 - 10 years after it was originally expected to open.
Lister said the casino operator was heavily exposed to the downturn as a business that depended on discretionary spending, as well as domestic and international travellers currently in lockdown.
"SkyCity has had a rough ride on multiple fronts, so the further delays to the convention centre is just another thing they have to deal with," he said.
Fletcher Building - the construction firm tasked with building the convention centre - also declined, down 3.2 per cent at $3.58.
Z Energy fell 1.6 per cent to $3.05. It said it has delayed reporting its annual result as Covid-19 triggered ongoing discussions with its lenders, requiring additional time to finalise the audited accounts. Despite the delay, Z Energy reaffirmed its earnings would be between $355m to $365m.
Briscoe Group was unchanged at $3.15. The retailer said the lockdown slashed quarterly sales by more than a third, despite a doubling of the firm's online trading.
Briscoes owns a stake in outdoor equipment chain Kathmandu Holdings, which fell 1.3 per cent to 78 cents.
Fisher & Paykel Healthcare posted the day's biggest gain, up 3.5 per cent at $28.35. Lister said the stock's increase of more than 24 per cent this year was "nothing short of stunning". The boost today was spurred by Australian competitor ResMed posting a strong result, which supported investor sentiment toward healthcare stocks.
Contact Energy rose 0.6 per cent to $6.33, Genesis Energy climbed 1.1 per cent to $2.84 and Vector rose 1.7 per cent to $3.59. Lister said defensive stocks were holding strong, while the more "economically sensitive" stocks like retailers and banks were being sold off.
"Banks are businesses that do well when an economy is firing on all cylinders, they do well during economic strength," Lister said. But during a recession banks are hit with more bad loans as unemployment rises, falling interest rates hurting margins and expectations from government to support customers.
"We don't need to worry about insolvency, but profitability is going to be challenged over the next couple of years. And I can't find many reasons to own the banks, other than they look cheap — which isn't a good reason to own them."
Australia & New Zealand Banking Group declined 4.4 per cent to $17.14, Westpac Banking Corp - which reports on Monday - fell 2.5 per cent to $16.77 and Heartland Group Holdings was unchanged at $1.13.
Outside the benchmark index, Smartpay dropped 23.5 per cent to 39 cents after a proposed $70m acquisition of its New Zealand business assets fell through.