New Zealand's benchmark stock index reversed yesterday's gains, falling almost 2 per cent as coronavirus fears fuelled market volatility.
The S&P/NZX 50 Index declined 214.99 points, or 1.8 per cent, to 11,425.90. Within the index, 37 stocks fell, 11 rose, and two were unchanged. Turnover was $174.4 million.
Today's drop followed a lead from Wall Street, which saw all the US benchmark indices fall more than 3 per cent overnight. Asian equity markets also fell, with most down more than 1 per cent. The Hang Seng was down 2.2 per cent in late Asian trading, while the S&P/ASX 200 was down 2.5 per cent.
The local slide followed a near-matching surge yesterday.
Bargain hunters trying to buy the dip and nervous investors concerned the covid-19 outbreak could continue to worsen are pulling the market in opposite directions and creating volatility, said Matthew Goodson managing director of Salt Funds.
"That is a tension that is roiling markets and causing these violent upswings and downswings," he said.
"Yesterday there was a view forming that the number of new virus cases was starting to level out in China – and there is nothing to suggest that has changed – but it has become apparent that it is spreading more widely outside China and the market is focused on that today."
Air New Zealand led the market lower, falling 5.5 per cent to $2.06. More than 2.9 million shares changed hands - more than three-times its daily average. Auckland International Airport fell 0.6 per cent to $7.89 on a volume of 1.6 million shares, close to average.
"Auckland Airport is holding up remarkably well considering the risks," Goodson said.
"Qantas today said it is cutting capacity over a number of routes including to Auckland, so there is no good news in the short term there."
Sporting goods retailer Kathmandu Holdings fell 5.2 per cent to $2.74, with 755,000 shares traded. That is twice its average the past three months.
Goodson said retailers would be looking out for disruptions to supply chains and assessing whether they are temporary or ongoing. Fears of contracting coronavirus could also encourage consumers to keep away from busy spaces like malls, he added.
Goodman Property Trust declined 2.4 per cent to $2.43 on a volume of 4.6 million shares. The stock shot up almost 9 per cent yesterday on the news it had been included in a global real estate index. Today's volume was more than four-times the stock's average.
"It shows the ridiculous impact that passive indices have on the market from time to time," Goodson said.
Goodson said the stock's inclusion was unexpected and triggered an estimated purchase of 15 to 20 million shares.
"I just pity the poor investors who have to buy that passive index and overpay at the inclusion price."
Port of Tauranga fell 3 per cent to $6.70. Napier Port declined 6 per cent to $3.15, after it warned of a potential slowdown in log exports due to reductions in harvesting and high log inventory levels on Chinese ports.
Goodson said the warning was "almost a non-warning" as the port was unable to quantify how significant the impact would be, or how long adverse conditions would last.
He expects more companies to come out with similar virus-related announcements in the coming weeks.
Outside of the NZX50 index, employment solutions provider PaySauce climbed 13.6 per cent to 67 cents after announcing a partnership with a global HR software vendor which will deliver more users to the PaySauce platform.
The company was unable to quantify the significance of the increase, which it said would become apparent in the second quarter.