Jamie Gray is a business reporter for the NZ Herald

New Zealand and Australian shares rebound after Brexit

Markets are having to adjust to the UK vote to leave the EU. Photo / AP
Markets are having to adjust to the UK vote to leave the EU. Photo / AP

The New Zealand and Australian sharemarkets bounced back off early lows to both end with slight gains as markets around the world continued to adjust to the prospect of Britain being out of the European Union after last week's surprise exit vote.

Both the Australasian markets started weaker after US$2 trillion was wiped off the value of world shares last week in the aftermath of the vote.

Japan - one of the hardest hit markets last week with a near 8 per cent decline - helped restore a measure of investor confidence when it rebounded on the resumption of trading yesterday. Continued volatility in the weeks ahead looks likely as the consequences of the decision by UK voters to exit the union after 43 years start to unfold.

By the close, the S&P/NZX 50 Index was up 19.4 points at 6686.92, while Australia's S&P/ASX 200 gained 0.5 per cent to close at 5137.2. Japan's Nikkei 225 was up 2.3 per cent during trading.

Movements in other markets were mixed, with the Shanghai Composite trading up 1.2 per cent, while Hong Kong's Hang Seng index was down 0.6 per cent.

The day started with about three-quarters of the local market showing up on broker screens as "red" but most stocks went into "green" territory as the day progressed.

"The Japanese market was stronger from the get go, and that seemed to drag up the Australian market, and we've done the same as well," said Mark Lister, Craigs Investment Partners' head of private wealth research.

"I would not interpret the green on the screen as a sign that the volatility is over by any stretch, but it was not unexpected to see a bit of a rebound," he said.

"I don't think that this will be the start of another Global Financial Crisis but I think that there is more volatility to come."

The price of gold, seen as a safe haven asset in volatile markets, remained elevated, having gained about 5.6 per cent since just before voting closed last week, trading yesterday at US$1327 an ounce.

In the currency markets, the New Zealand dollar was trading at US70.63c yesterday, after falling around US3c on Friday to just under US70c.

"We see scope for this reaction to extend further during the weeks ahead if the UK's exit is perceived as increasing the chances of other countries also leaving the EU," Westpac said in a commentary. "We expect it to trade below US70.50c this week, paving the way for a move to the high 60s during the weeks ahead."

- NZ Herald

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