Volatile mood reverses previous day’s gains

New Zealand’s benchmark stock index reversed Thursday’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.

The drop followed a lead from Wall Street, which saw all the US benchmark indices fall more than 3 per cent overnight on Thursday. 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 the day before.

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.

“On Thursday 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 was focused on that on Friday.”

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. “Auckland Airport is holding up remarkably well considering the risks,” Goodson said.

“Qantas yesterday said it is cutting capacity on 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 over the past three months.

Goodson said retailers would be looking out for disruption 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 on Thursday on the news it had been included in a global real estate index.

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.