NZ stocks down again after Wall St fall, central bank rate hikes

NZ shares prices are sharply weaker after another bad day on Wall Street. Photo / AP

New Zealand share prices fell sharply on light volume in response to another terrible day's trading on Wall Street.

Local stocks were also weaker ahead of some key index changes later in the day.

Investors were becoming increasingly worried about economic slowdown or recession with cyclical parts of markets getting bashed.

By midday, the S&P/NZX50 index was down by 1.8 per cent at 10,450 after a mostly flat session on Thursday.

On Wall Street, stocks were sold off sharply after Switzerland and the UK joined a global rush to raise interest rates.

America's S&P500 stock index slid 3.2 per cent for the day, making for a 6 per cent fall this week.

Almost every stock in the S&P500 declined while the tech-heavy Nasdaq Composite index tumbled 4.1 per cent.

The S&P500 had closed the previous session 1.5 per cent higher after the Fed raised its rate by three-quarters of a percentage point.

The Fed's decision was followed on Thursday by the Swiss National Bank raising its policy rate for the first time in 15 years.

The Bank of England on Thursday also lifted its benchmark interest rate, by 0.25 percentage points to 1.25 per cent.

Salt Funds managing director Matt Goodson said the local market had seen broad-based selling on light volumes, which he expected to pick up as the day progresses.

"Then there are quite a few index changes on the close, so there could be more movement then," he said.

Across the Tasman, stock market futures pointed to a similar decline on the ASX.

"What you do find in this market is stocks that initially you would expect to be quite defensive get caught up in the search for liquidity," he said.

Goodson said monetary authorities globally looked to be playing catch-up with inflation.

"All around the world, central banks have been asleep at the wheel.

"They are now moving and they are now moving too late, and markets are worried about how aggressively they are going to have to move.

"They might keep tightening even as economies slow."

Goodson said the sell-off on sharemarkets was of central banks' making.

"Many people were arguing late last year that central banks were far too slow and far too loose."

Some central banks had also argued that inflation was simply transitory, Goodson said.

"They have been proven dead wrong."