New Zealand shares joined a global selloff as a slump in US oil futures prices sapped investor sentiment that had been on the mend due to optimism over the slowing pace of Covid-19 pandemic.
The S&P/NZX 50 Index dropped 226.80 points, or 2.1 per cent, to 109,535.87. Within the index, 37 stocks fell, nine rose, and four were unchanged. Turnover was $186 million.
Equity markets around the world fell after rapid selling of US May crude oil contracts pushed spot prices into negative territory for the first time. With most of the world on lockdown, demand for crude has fallen away. Storage facilities are filling rapidly and the price of stowing barrels of unused oil exceeds the value of the commodity itself.
The price shock weighed on Wall Street and Asian share markets followed suit with Hong Kong's Hang Seng falling 2.1 per cent, Shanghai's SSE Composite Index dropping 1.3 per cent and Australia's S&P/ASX 200 down 2 per cent.
Stuart Williams, head of equities at Nikko Asset Management, said the oil price didn't weigh directly on NZX-listed companies' share prices, but that the negative headlines gave investors a reason to back off last week's rally.
"Should it affect the companies that are driving our market down today? No," he said. "But our market was probably up a bit too strongly, and it's a convenient headline for the market to move lower on."
Williams said while the virus appeared to be coming under control in New Zealand, the economic implications of the outbreak were only just emerging.
"We are not out of the woods, rather we are only just into the woods," he said.
The local market was led lower by companies that enjoyed a resurgence last week.
Tourism Holdings sank 11.6 per cent to $1.22, Vista Group International dropped 8.1 per cent to $1.37 and SkyCity Entertainment Group declined 6.4 per cent to $2.33.
Williams warned not to focus too much on the daily swings of those stocks given their recent volatility, but rather to take a medium-term view, especially while new lockdown conditions were being assessed.
Yesterday, the government extended the current restrictions until next Tuesday, spurring price action amid companies preparing to resume operations under the looser settings.
Fletcher Building - which would be able to resume construction projects - fell 4.3 per cent to $3.79.
Restaurant Brands New Zealand — which expected to reopen its fast food drive-thrus at level 3 — fell 2.5 per cent to $11.75 after warning of a significant impact on the June quarter with all New Zealand stores closed for most of April. March quarter sales rose 5.3 per cent to $200.1m.
Ebos Group rose 1.1 per cent to $24.18 after it said its healthcare division has experienced "unprecedented levels of demand" amid the coronavirus crisis.
Goodman Property Trust posted the day's biggest gain, up 2.9 per cent at $2.325.
Refining NZ fell 3.1 per cent to 92 cents. Williams said with a price cap and floor the stock was insulated from the spot price shock of the day.
Fuel retailer Z Energy fell 3.6 per cent to $3.21 as investors saw future outbreak alert-levels would remain restrictive even for domestic travel.
Outside the benchmark index, Cavalier Corp fell 6.1 per cent to 18.4 cents after it said it would reopen manufacturing operations in Auckland, Napier and Whanganui after level 4 restrictions were lifted. Retail sales in New Zealand were halted during lockdown and the company said trading was negatively affected.
Tower fell 3.9 per cent to 62.5 cents after it said it expected to book large claim expenses of between $10.5m and $12.5m from Cyclone Harold in the Pacific and the Timaru hailstorm.