KEY POINTS:
Stock markets around the world took their first tumble of the year yesterday, wiping out most of their gains for 2009 as the deepening global recession reduced profits and drove down oil and metals prices.
Markets in Japan, Hong Kong and Australia followed Wall St's lead and fell
by up to 3.9 per cent. The New Zealand sharemarket shed just 0.27 per cent in light trading.
US stocks tumbled yesterday in their worst decline in more than a month after a grim private-sector jobs report coupled with a revenue warning from chipmaker Intel revived concerns about the economy.
The jobs data showed Americans probably suffered a net loss of 2.4 million jobs last year. If the estimate proves correct, it would mark the first annual job loss since the previous recession in 2001.
It also would be the worst year of job losses since 1945, when employers slashed nearly 2.8 million jobs. More potentially negative jobs data was due this morning.
US investors also had to digest a new official estimate that the Government would run a US$1.2 trillion ($2 trillion) deficit this year.
On the upside for consumers the price of crude oil tumbled 12 per cent overnight, its largest percentage drop in seven years, as a US government report showed crude stocks rose much more than expected in the world's top energy consumer.
The drop wiped rises in the last week that had been driven by uncertainty surrounding the conflict in Gaza.
The 2.7 per cent plunge in the Dow Jones industrial average set off steep falls in other major bourses around the world.
The FTSE 100 shed 2.8 per cent, while Japan's Nikkei snapped a seven-day winning streak, slipping as much as 3 per cent briefly before ending down 3.9 per cent at 8876.42.
Bank of China led a retreat in Hong Kong after billionaire Li Ka-shing sold shares in the lender at a discount to yesterday's closing price.
The Hang Seng closed down 4.1 per cent last night at 14,366.37.
In Australia the S&P/ASX200 index opened down 81.5 points, or 2.2 per cent, after Macquarie Bank put out a profit warning.
It ended the day at 3694.3, down 2.3 per cent.
The New Zealand sharemarket was down around 1 per cent shortly after opening, but clawed back those losses as the day progressed to end at 2756.65, down 7.59 points or 0.27 per cent.
Hamilton Hindin Greene director Grant Williamson said volumes remained light.
"The sharemarket's come back to reality after a nice improvement over the Christmas-New Year period. However, having said that, our market is really in holiday mode and there's not a lot of trading going on.
"You'd have to say that it's held up reasonably well considering the falls we had in America.
"I still feel there is a high degree of confidence among investors at the current time compared to what we saw maybe back in October-November."
A factor in the slight fall domestically may be our declining interest rates, he said.
"I think we are starting to see a reasonable amount of retail investors start to withdraw funds from banks because of low interest rates, and look for the higher yielding stocks on the sharemarket."
- ADDITIONAL REPORTING: AGENCIES