NZX in correction territory - down 10pc from September high

The New Zealand share market has plunged more into "correction" - falling more than 1 percent in the first hour of trading.

It is now down more than 10 per cent from its record high on September 7.

US stocks fell again last night amid ongoing fears about the potential election of Donald Trump and US Federal Reserve comments about an interest rate rise in December.

The NZX-50 has followed this morning falling 1.1 per cent to 6777 points to take its total fall past 10 per cent since it peaked at 7571.01 points in September.

Markets are generally considered to be in correction after a 10 per cent fall. After a 20 per cent fall they are described as a bear market.

The fall hasn't been as dramatic as slumps that have historically plagued this time of year - the crashes of 1929, 1987 and 2008 all occurred in September and October.

But after one of the longest bull runs on record - which saw the NZX-50 gain 160 per cent between October 2008 and this September - many professional investors have been expecting some form of correction.

It has fallen further than many major markets around the world.

Equity market investors had already been feeling wary of a flight back towards bonds and cash as US interest rates start to rise.

Risk around the US presidential election - as the race there tightens up - has added to downward pressure.

For the past few years New Zealand in particular has been viewed as a high yielding safe haven with a number of low-risk infrastructure stocks like Auckland International Airport and the power companies.

Foreign money has poured in. Nearly 50 per cent of the free-float of the New Zealand market is now owned by foreign investors compared with as little as 25 per cent four years ago.

That's making the NZX even more vulnerable to falls as foreign investors re-weight their portfolios.

On the plus side New Zealand is still experiencing strong economic conditions and a stable political environment that should provide good support for the market - hopefully mitigating and slowing the pace of any further falls.