Concern about low oil prices and China's growth prospects has driven New Zealand's sharemarket lower, but the decline was modest compared with the falls on many major markets.

The local market started off weaker, taking its lead from an overnight sell-off on Wall Street that saw the main S&P 500 index move into what traders said was "correction" territory. By close, the S&P/NZX 50 Index was down 42.58 points, or 0.7 per cent, at 6109.29 but off its session low of 6082.1.

Since reaching a record high of 6324.26 on December 31, the index has lost 214 points or 3.4 per cent. The benchmark index had gained 13.2 per cent in the final quarter of 2015. Elsewhere in the Asia Pacific region, Australia's S&P/ASX200 index closed down 1.6 per cent yesterday -- continuing a sell-off that has seen the Australian sharemarket have its worst start to a year on record -- and Japan's Nikkei was trading down 4 per cent.

Matt Goodson, managing director at Salt Funds Management, said many of the world's major markets had fared badly because of their exposure to oil, but China was the main driver of investor sentiment.


"The oil and the energy companies are a far more significant part of market indices in the United States, Europe and Australia than is the case here, so to a degree some of those declines have less relevance to the New Zealand market because of that," Goodson said.

"Falling oil prices are like a tax cut for the world, so in theory at least they should be highly stimulatory."

China appeared to be the bigger issue on investors' minds as the focus turned to the credibility of growth data and very high debt levels in the People's Republic.

While there was concern about China, there was cause for optimism about the US, which has been reporting strong job growth over the past few months, Goodson said.

In the commodities markets, Brent crude oil fell below US$30 a barrel for the first time in 12 years on the expectation the resumption of Iranian exports will support a global glut. In the US, another volatile day for crude oil prices knocked the Standard & Poor's 500 Index down 10 per cent from its November peak -- a drop which is known as a correction on Wall Street.

The Dow Jones industrial average also tumbled, losing more than 300 points before closing within 25 points of its own correction level.

The rocky start to the year reflects worries on Wall Street about a global economic slowdown, plunging oil prices and the implications for US companies. It also deepens the pain for many investors after flat returns for the US stock market last year.

The S&P 500 index is now down 7.5 per cent this year, while the Dow is off 7.3 per cent. The Nasdaq is deeper in the red, down 9.6 per cent. Energy and consumer stocks bore the brunt of the selling.

Some of the biggest winners from last year, such as Netflix and Amazon, both of which doubled in value in 2015, also fell sharply.

-Additional reporting AP