The New Zealand share market joined with others around the Pacific Rim to trade lower after rising trade tensions between the US and China drove the US share market down by 2.9 per cent overnight.

By mid afternoon, NZX-50 index was off by 1.9 per cent at 10,565 but other markets around the region fared worse in wake of the yuan's depreciation, the worsening state of Sino-US relations and rising concerns over civil unrest in Hong Kong.

In Australia, the ASX-200 index was down by 2.4 per cent and Japan's Nikkei 225 was down 2.9 per cent.

In Hong Kong, MSCI Hong Kong Index fell by 3 per cent, heading for a 10th straight decline, a day after a general strike led to traffic chaos, violence, tear gas and flight cancellations.


Matt Goodson, managing director at Salt Funds Management, said a weaker Chinese yuan would make New Zealand and Australia's exports more expensive in China.

He added the situation in Hong Kong was "extremely volatile" and that it was an additional concern for world financial markets.

Up until recently, the local share market had been on a record-breaking run higher.

While the market New Zealand market had softened, Goodson said local stocks were still trading at extremely high earnings multiples.

"That's largely a function of ultra low bond yields and certainly not a reflection of future earnings growth," he said.

The local share market's declines were led by a sharp decline in market heavyweight A2 Milk, and other "growth" stocks, but the broader market was mostly steady.

Overnight, rising world trade tensions drove the US sharemarket to its biggest one-day drop so far this year, the Dow Jones Industrial Average falling by 767 points to 25,717.74.

Mark Lister, head of private wealth research at Craigs Investment Partners, said the high yielding defensive stocks, such as telco Spark and power generator Meridian held up well.


"We are holding up better than those offshore markets because of the defensive nature of our market," Lister said.

"The growth and cyclical end of town is where it is being felt," he said.

In the "growth" category, cinema software company Vista Group and infrastructure provider Gentrack were singled out for selling, but by midafternoon were trading off their lows.

In the "cyclical" camp - Fletcher Building was trading 14 cents, or 3 per cent, lower at $4.71.