Market close: NZX falls in response to US markets' slump

Restaurants Brands decreased 40c or 3.29 per cent to $11.75. Photo / 123RF

The United States markets' worst trading day since June had its expected effect on New Zealand shares, but the fall wasn't as bad it could have been.

The leading US indices slumped well over 2 per cent overnight and in Nasdaq's case more than 4 per cent. The S&P/NZX 50 Index fell 156.561 points or 1.32 per cent to 11,739.11. There were 104 decliners and 35 gainers over the whole market, with 65.67 million shares worth $180.3 million traded.

Across the Tasman, the S&P/ASX 200 Index was down 131.8 points or 2.19 per cent to 5876 at 5.45pm.

Dan Stratful, investment adviser with Forsyth Barr, said the carnage in the US was all driven by the technology stocks. "They got overheated and they had a healthy blow-off. It was overdue. We were not as affected, as usual and New Zealand is more of a defensive market with its utility and property stocks. The US market is more high-growth led by the technology companies."

Two of New Zealand's growth stocks, however, didn't escape. Fisher and Paykel Healthcare was down 20c to $33.60 on trade worth $22.6m and a2 Milk fell 44c or 2.41 per cent to $17.84 on $16.36m worth of trade.

In its outlook for the 2021 financial year, a2 Milk said there is "the potential for moderation of economic activity" that could impact consumer behaviour in its core markets, most notably China. Operating earnings (ebitda) margin is forecast at between 30 and 31 per cent.

Amongst the energy stocks, Mercury was down 14c or 2.7 per cent to $5.04, Contact declined 6c to $6.28, Meridian fell 11.5c or 2.29 per cent to $4.90, Vector slipped 6c to $4.50 but Trustpower was up 11c to $7.15.

Restaurants Brands decreased 40c or 3.29 per cent to $11.75, Auckland International Airport fell 9c to $7.01and Tourism Holdings was down 8c or 3.79per cent to $2.03. These three stocks have been hit hard by the Covid disruption and lockdowns.

It was a rough time on Wall Street overnight as the leading technology stocks faced sharp drops after their stellar run this year. The tech-heavy Nasdaq Composite Index slumped 4.11 per cent to 10,847.69, falling 7.82 per cent in four trading days. The Nasdaq has entered correction territory, defined as a 10 per cent drop from its most recent peak of 12,056.44.

Apple was down 6.73 per cent to US$112.82 ($170.23),

Microsoft slipped 5.41 per cent to US$202.66,

Amazon declined 4.39 per cent to US$3149.84,

Facebook lost 4.09 per cent to US$271.16,

interactive graphics company Nvidia fell 5.62 per cent to US$476.52,

Alphabet was down 3.64 per cent to US$1523.60, and

Netflix declined 1.75 per cent to US$507.02.

Electric vehicle maker Tesla joined the rout, falling 21 per cent to US$330.21 in its worst trading day in six months. Tesla has been excluded from the S&P 500. Rival Nikola Corp soared 40.79 per cent to US$50.05 after signing a strategic partnership with General Motors, with GM taking an 11 per cent stake.

The Dow Jones Industrial Index fell 632.42 points or 2.25 per cent to 28,133.31 and the S&P 500 was down 2.78 per cent to 3331.84. And market commentators feared the worst was not over.

Investors in the United States were rattled by renewed US-China tensions, uncertainty about the November presidential election and the fear that Covid-19 will re-emerge in the cooler winter months. President Donald Trump said he wasn't "happy at all" with China and spoke about an economic "decoupling".

On the Australian market, Kiwi buy now, pay later online company Laybuy fell 6 per cent A$1.935 ($2.11) in its third day of trading after listing earlier this week at A$1.41.