Market commentaries

AUCKLAND: New Zealand shares snapped a threeday rally in volatile trading, as investors continue to assess the fallout from the Level 4 shutdown and as higher bond yields reduce the attraction of companies that typically pay a reliable dividend in ordinary times.

The S&P/NZX50 fell 75.74 points, or 0.8%, to 9556.73. Within the index, 20 stocks fell, 20 rose and four were unchanged. Turnover was $252.4 million.

While the local market opened stronger following a lively lead from Wall Street overnight, the trend turned downward throughout the day yesterday as further effects of the national shutdown became apparent.

‘‘This is a remarkable event for many companies, so the market is trying to feel out how much of this is temporary and how much is permanent,’’ Salt Funds Management managing director Matthew Goodson said.

Mr Goodson said the volatility in markets was unprecedented: Wall Street’s S&P 500 had fallen 20% in just 19 days. The S&P 500 extended its recent gain on Thursday night, when it closed up 6.2% on the US senate’s approval of a $US2 trillion ($NZ3.4 trillion) fiscal stimulus package.

The NZX50 has itself climbed 12.4% since Monday, when its recent slide stalled.

Utilities were weaker as higher bond yields reduced the attraction of companies that pay reliable dividends. The yield on the 10year Government bond has climbed to 1.12% from 0.983% at Monday’s close.

Telcoinfrastructure provider Chorus led the market lower, falling 5.4% to $6.55. Yesterday it affirmed its annual earnings guidance, and said it would put off $50 million of capital spending due to the lockdown.

Lines company Vector fell 5.2% to $3.31, and Auckland International Airport declined 4.6% to $5.535.

Meridian Energy fell 3.4% to $3.99, Contact Energy declined 1.8% to $5.47, and Mercury New Zealand decreased 1.9% to $4.25.

Fuel retailer Z Energy fell 4.8% to $2.75.

Property stocks were also under pressure after reports that large firms were refusing to pay rent through the lockdown.

Mr Goodson said that was a concern to investors who had backed off some property stocks yesterday, despite driving strong price growth during the week’s rally.

Goodman Property Trust fell 2.3% to $2.14 and Argosy Property declined 1.2% to 85 cents.

Not all property stocks were weaker. Kiwi Property Group rose 3.5% to 90 cents and Investore Property — which said it would only lose 0.5% of revenue from lost rent — climbed 9.3% to $1.64. Its manager Stride Property advanced 3% to $1.39.

Many stocks continued to rally from record lows despite the index being down.

Tourism Holdings posted yesterday’s biggest gain, up 10.1% at $1.20. Sky Network Television climbed 9.1% to 30 cents, Air New Zealand increased 1.1% to 90 cents, and Vista Group International advanced 4.8% to $1.30.

‘‘The market, in some cases, was quite oversold. So the speed of the decline and the nature of the decline surprised a lot of market participants,’’ Mr Goodson said.

Synlait Milk rose 4.6% to $5.52, Fonterra Shareholders’ Fund units increased 2.1% to $3.88 and a2 Milk fell 1.6% to $16.46.

Australia’s sharemarket plunged again yesterday following three days of gains, smashing any incipient hopes that the bear market is finished.

The S&P/ASX200 benchmark index gained 2% in early trade but then faded throughout the day to finish yesterday down 270.9 points, or 5.3%, to 4824.4.

The broader All Ordinaries index closed 261 points, or 5.08%, at 4874.2.

‘‘It’s quite a tumble,’’ CommSec market analyst Steven Daghlian said.

For the week the market finished just 25.7 points up, or 0.5%.

Three days of gains totalling 567.2 points were sandwiched by two days of losses on Monday and Friday.

‘‘I think there’s a bit of cautiousness heading into the weekend, with how Covid19 infections could unfold and Government reactions,’’ Mr Daghlian said.

The US House of Representatives still has to vote on a $US2.2 trillion stimulus measure, while 3.3 million people have filed for unemployment benefits — six times the country’s previous record.

‘‘Things are not looking great,’’ Mr Daghlian said. Every sector was lower yesterday; real estate was the worst hit, falling 8.7%. Mirvac fell 10.1% and Goodman Group dropped 10.7%.

Scentre Group dropped 12.5% as it and Premier Investments exchanged words over whether proper protocols were followed after two of Premier’s workers were allegedly exposed to Covid19positive customers at one of Scentre’s Brisbane malls a fortnight ago.

In the financial space, the big banks fell between 6%7%.