The stock market slide yesterday came as a surprise to brokers, as investors turned their attention to recession and the rollercoaster kept on rolling.
Two of the biggest stocks to feel the heat were Fletcher Building and Telecom, dropping 5.9 per cent and 8.6 per cent respectively.
The
NZX50, comprising the top 50 listed companies on the NZSX market, closed down 139.95 points, or 4.82 per cent, at 2764.69 - one of the biggest falls since the global financial crisis.
ASB Securities adviser Stephen Wright said the drop was a surprise.
"But with the welter of bad news it just in the end keeps bearing down and more people capitulating and just taking what they can, except bear in mind that the turnover is no bigger than an average day."
Everybody had been saying it was the beginning of the end of the credit crunch, Wright said. "But now of course the focus in overseas markets just switched to recession worries," he said.
"I guess the feeling is that governments have expended themselves trying to solve the credit crunch and have got no more firepower, or very little firepower, to stave off recession."
Japan's Nikkei share average plunged 11.4 per cent and the Australian sharemarket fell nearly 7 per cent yesterday.
Hamilton Hindin Greene director Grant Williamson said investors in the US in particular were starting to worry about recession.
"I think what kicked off last night's tumble was some very disappointing economic data and that just caused a number of investors to throw their hands up and say enough is enough, let's get out," Williamson said.
"It's quite typical of a bear market where you do get rallies but they peter out quite quickly," Williamson said.
"At this stage it's still looking quite rough for investors."
Direct Broking managing director Mark Peterson said the extent of the drop was a surprise.
"I think everybody was probably hoping it wasn't going to happen but in the back of their minds they were probably also thinking that maybe it could." Shares dropped across the board, he said.
"I just wonder whether those with industrial retail type focuses are maybe wearing a little bit more heat than others but in the New Zealand scene that's most of them anyway really."
