Market Close: NZ shares fall as US-China tensions weigh on global outlook

A2 Milk Company shares fell 1.5 per cent to $20.84. The company is highly dependent on the Chinese market. Photo / File

New Zealand shares fell as the prospect of heightened tensions between the US and China weighed on the global economic outlook and prospects for corporate earnings.

The S&P/NZX 50 Index declined 57.15 points, or 0.5 per cent, to 11,636.26. Within the index, 29 stocks fell, 13 rose, and eight were unchanged. Turnover was a light $90.1 million.

Stock markets across Asia fell after Beijing said it would retaliate against a US order that China close its consulate in Houston, Texas, raising fears that a trade deal between the world's two biggest economies could be spiked. China's foreign ministry ordered the US to close its consulate in Chengdu, the capital of the southwestern Sichuan province.

China's Shanghai and Shenzhen stock market fell more than 2 per cent. Hong Kong's Hang Seng dropped 1.8 per cent and Australia's S&P/ASX 200 fell 1.2 per cent.

A weak lead from Wall Street added to the negative tone, with an unexpected increase in new jobless claims and mixed company earnings triggering a widespread sell-off that hit even the strongest tech names that have driven the recovery.

Michael McCarthy, a market strategist at CMC Markets, said the weak data prompted investors to buy 'haven' assets such as gold, which was trading at an 11-year high at almost US$1,885 per ounce.

"Gold is flashing red signals to the world that there is a lot of concern. Bond markets are doing the same, but really for the first time last night sharemarkets responded," he said.

McCarthy said the decline in the FAANG stocks - Facebook, Amazon, Apple, Netflix and Google's parent Alphabet - was a real concern given they'd accounted for most of the S&P 500 index's gain since the March trough.

On the local benchmark, A2 Milk Company fell 1.5 per cent to $20.84. The company is highly dependent on the Chinese market and has been a key driver of the NZX 50's recovery over the past four months. The stock is still up half a per cent this week despite today's decline.

Kiwi Property Group led the market lower, falling 3.7 per cent to $1.03, as it dropped with most of the property sector.

Goodman Property Trust fell 1.8 per cent to $2.18, Vital Healthcare Property Trust declined 1.7 per cent to $2.615 and Precinct Properties dropped 1.5 per cent to $1.695. Argosy Property bucked the trend, rising 1.2 per cent to $1.285.

Chorus rose 2.1 per cent to $7.40, posting the day's biggest gain, as it recovered from yesterday's decline on the Commerce Commission's review of its regulatory position.

Oceania Healthcare rose 2 per cent to $1.01, also rallying from yesterday when it reported weak earnings. Today's comeback may have been helped by a note from Jarden analysts who described the earnings as a "solid operating result in a challenging environment" and lifted their target price on the stock by 8 cents to $1.08.

Air New Zealand was down 0.4 per cent to $1.325. It said was ramping up its domestic schedule for August to 70 per cent of pre-covid levels. The airline had planned to operate at about 55 per cent of its usual capacity during August.

Auckland International Airport rose 0.5 per cent at $6.34.

Z Energy rose 0.3 per cent to $2.95, extending a rally which has seen it gain 6.6 per cent this week after it reported it was growing market share.

Trustpower fell 0.2 per cent to $6.82 after it signalled it could take the government to court over planning controls intended to improve water quality in the country's lakes and rivers.

Outside of the top 50 index, Pacific Edge rose 19 per cent to 69 cents after ANZ New Zealand Investments bought $22 million of new shares at a 14 per cent premium. The stock is up 475 per cent year-to-date and may be next in line to join the index.