New Zealand shares fell as a warning of slow economic recovery from the US Federal Reserve prompted a global retreat from equity markets.
The S&P/NZX 50 Index fell 42.87 points, or 0.4 per cent, to 10,745.16. Within the index, 27 stocks fell, 18 rose and were five unchanged. Turnover was $148 million.
Overnight, investors heeded US Fed chair Jerome Powell's warning of an "extended period" of weak economic growth, triggering a correction in markets pricing in a swifter recovery.
Wall Street tumbled following the webcast speech, the S&P 500 down 1.8 per cent and the Dow Jones Industrial Average down 2.2 per cent.
Asian markets followed the negative lead, Hong Kong's Hang Seng dropping 1.1 per cent, Shanghai's Composite falling 0.5 per cent and Australia's S&P/ASX 200 declining 1.1 per cent.
"The recovery rally we saw in April has moderated with people like Jerome Powell out there warning of the risks to the future," Milford Asset Management portfolio manager, Sam Trethewey, said.
"He doesn't want people to get ahead of themselves expecting a fast recovery when there is a lot for economies to navigate through to get back to where we were."
The New Zealand government today revealed a budget with a $50 billion Covid-19 recovery fund to soften, but not prevent, the coming recession.
Trethewey said spending announced in the budget takes some time to be implemented and flow through to companies listed on the NZX, so rarely has a bearing on daily share price movements.
Instead, with offshore ownership making up half of the free-floating market, global sentiment was driving price action today, Trethewey said.
Mercury NZ led the market lower, falling 4.5 per cent to $4.70.
"There is some profit-taking in Mercury and Meridian today. They have had a strong run over the past few days, so investors are locking in some of that gain," Trethewey said.
Meridian Energy fell 2.7 per cent to $4.71, while Contact Energy edged 0.3 per cent higher to $6.23 and Genesis Energy rose 0.2 per cent to $2.82.
Sky Network Television continued to slip backwards after a rally earlier in the week, falling 2.8 per cent to 35 cents.
Synlait Milk declined 2.8 per cent to $7.02, but on a light volume of just 27,000 shares.
Z Energy dropped 1.3 per cent to $3.00 drifting closer to its capital raising offer price of $2.90. The company plans to raise up to a further $60m through a share purchase plan at $2.90 or less.
Trethewey said the capital raise would have soaked up many of the available buyers and would tend to put downward pressure on a share price.
Tourism Holdings fell 1.9 per cent to $1.59 with investors finding no encouragement in the $400m earmarked to support the tourism industry in the budget.
Australia and New Zealand Banking Group declined 1.1 per cent to $16.40 and Westpac Banking Corp slipped 1.5 per cent to $16.14, although both on light volumes.
Fletcher Building posted the day's biggest gain, rising 5.9 per cent to $3.39. Trethewey said Fletcher was experiencing a recovery rally after being sold off yesterday when it was dropped from the New Zealand MCSI index.
The MCSI index tracks the eight largest stocks, but was cut down to seven yesterday, causing many investors to reallocate their holdings.
Pushpay rose 4.6 per cent to $6.85, taking its gain since the start of the year to 71 per cent.
Trethewey said Pushpay had "shot out the lights" with the market not anticipating the extent of the benefit Covid-19 would bring for the company.
The outbreak accelerated a shift towards digital giving in cash orientated US society, by church-goers who found online giving to be the only way to donate money with stay-at-home orders in place.
"The stock continues to perform really well and shows any company that can grow earnings and demonstrate operating leverage will be highly sought after in the current environment," Trethewey said.
Freightways has increased its banking facilities by $50m to ensure the firm can cope with the weaker economy. Groupwide, total revenue dropped by an average of 32 per cent in April but had improved during that time both in terms of volume and type of activity. Its rose 3.6 per cent to $6.89.