The New Zealand sharemarket's relief rally proved short-lived, with local stocks giving up gains and falling into negative territory this afternoon.

The S&P/NZX 50 initially rose solidly, jumping as much as 0.67 per cent in early trading after a severe sell-off saw the index close down 2.5 per cent yesterday.

But sellers returned to the market this afternoon and the index slipped back to be down 0.3 per cent at 3.30pm.

Across the Tasman, the S&P/ASX 200 has also given back earlier gains and was up only 0.17 per cent at 3.30pm after rising around 1 per cent at the open.


Markets across Asia were mixed.

Major movers on the NZX 50 this afternoon include Mercury NZ, down 3.9 per cent, and Ryman Healthcare, down 2.7 per cent.

Shares in Auckland Airport had fallen 2.6 per cent.

The local market's initial bounce followed a rally on Wall Street overnight after comments from Federal Reserve Governor Lael Brainard calmed fears that the US central bank may hike rates next week.

Low and even negative interest rates have been lubricating share markets and pushing investors toward stocks, especially those that pay solid dividends.

Those dynamics have helped to perpetuate an equity bull-run now well into its seventh year in New Zealand and the US.

Craigs Investment Partners head of private wealth research Mark Lister said it was difficult to attribute the market's dip this afternoon to a specific cause.

"It's just been a bit of a short-lived rebound because people have still got some concerns and worries," Lister said. "Maybe people put a bit too much weight in the Brainard commentary."

He said there were still many reasons for investors to be nervous.

"The market is still close to all-time highs and we've still got a Fed meeting next week and while they'll probably do nothing there's still an outside chance they might do something."

Markets became jittery late last week after Boston Federal Reserve President Eric Rosengren said the Fed faced risks if it waited too long to hike rates, prompting fears that a hike could take place next week.

But following Brainard's speech, markets reduced their expectations for a September rate rise to 15 per cent from 24 per cent on Friday and for a December hike to 54.5 per cent from 59.2 per cent, according to Reuters.

Grant Williamson, of sharebrokers Hamilton Hindin Greene, said the outlook for US interest rates could continue to drive market volatility.

"One positive that will probably underpin our market is the Nuplex takeover payout, which is due anytime," Williamson said.

"A significant amount of that is likely to be reinvested in the New Zealand market - that could keep it pretty strong on the buy side."