US and Australian markets set scene for weak start to NZX trading on Monday

Saturday, 7 March 2020

US stocks finished well on Saturday, NZ time, but were still down on their previous close.

The NZX is poised to come under pressure again when trading opens on Monday, after US and Australian shares took another hit following the close of trading in New Zealand on Friday.

The US Dow Jones index closed down 1 per cent at 10am on Saturday despite a late rally, with the tech-rich Nasdaq index dropping 1.9 per cent.

Those market are now down 12 per cent on their peaks in February, putting them further into 'correction' territory, while the NZX is as yet only 7 per cent off its February high.

Adding to the gloom, Germany's biggest airline, Lufthansa, announced it was planning to axe up to 50 per cent of its flights in the next few weeks, depending on developments, saying it had seen 'a drastic decline in bookings'.

The ASX also had a weak finish after the close of trading in New Zealand on Friday, ending the day 2.8 per cent down on the day and down 13 per cent from its high last month.

A second person has died from the coronavirus in the UK, the Health Secretary Matt Hancock has confirmed.

* Coronavirus: Kiwis don't think Govt can stop outbreak

Lufthansa is planning on halving its flights as travel demand sinks.

* Coronavirus 'could take $100m off Air New Zealand's profit'**

Analyst Morningstar noted the drop represented the second-worst day on the Australian exchange this year, saying equities were 'once again routed on fears of the coronavirus'.

The NZX was down 1.8 per cent on Friday with Air NZ hitting a new three-year low of $2.06 after falling 5.5 per cent.

But local shares fared better than most, setting up the possibility of a further retreat on Monday in the absence of positive weekend news.

Shares in Spark and Chorus have continued to buck the trend amid expectations telecommunications firms could be some of the few to be spared from the impact of the virus.

Their shares both rose on Friday, reaching new all-time highs since the businesses were split out from Telecom in 2011.

The New Zealand dollar continues to edge higher as the Reserve Bank waits to decide whether to follow other central banks in cutting the official cash rate, with a decision not currently being tipped before its next scheduled meeting on March 25.

It was trading at 63.6 US cents on Saturday, up more than 1.6c on its Monday low.