New Zealand shares slumped more than 10 per cent today for the first time ever after the Government announced a series of stricter restrictions to counter the spread of Covid-19.
The S&P NZX-50 Index opened down 4.9 per cent this morning before falling further to be down 943.79 points, or 10.3 per cent, to 8,252.48 at 3pm.
Prime Minister Jacinda Ardern announced this afternoon that the country would be in coronavirus lockdown for the next four weeks.
Schools and non-essential services across New Zealand will be closed for that time as the Government to tries to stop the spread of coronavirus.
The country's coronavirus alert level would be raised to level 3 tomorrow.
In 48 hours the alert level would be raised to level 4 - "stay at home" instruction.
News that the Reserve Bank has initiated a $30 billion buyback of Government bonds - much bigger than expected - did not stem the tide as the global economy continues to reel from reduced trading caused by Covid-19.
With no room left to cut the official cash rate the RBNZ is being forced to use qualitative easing for the first time to try and push market rates lower.
Effectively qualitative easing is now the RBNZ's primary tool for cutting rates.
The process of using qualitative easing is also sometimes dubbed "money printing" because it can effectively release large amounts of cash into the economy.
Its primary purpose is to push interest rates lower but may in fact be needed just to hold them down as credit markets around the world have been under intense pressure after trillions of new government debt was unleashed last week.
It is anticipated that markets will remain highly volatile this week.
Across the ditch, Australian Prime Minister Scott Morrison on Sunday ordered many venues, including pubs, casinos, gyms and cinemas, to close from midday Monday to combat coronavirus after many people appeared to disregard health warnings and congregated in large numbers in recent days.
Australia had 1098 confirmed cases as of Sunday with seven deaths linked to the illness. The number jumped around 200 from Saturday.
New Zealand now has 102 cases.
Wall Street ended lower Friday after the number of US cases continued to skyrocket and different states impose stay-at-home orders for residents. New York alone now has more than 15,000 cases.
The Dow Jones Industrial Average shed 4.6 per cent, while the S&P 500 ended down 4.3 per cent and the Nasdaq lost 4.0 per cent.
According to AP, Mayor Bill de Blasio said Sunday on NBC's "Meet the Press" that his city is in desperate need of ventilators and other medical supplies and staff, and lambasted the White House as non-responsive.
According to the Australian Financial Review, all three US benchmarks are poised for a 4.2 per cent drop on Monday in New York.
- With BusinessDesk