Financial markets face an uncertain time while the world's two biggest economies - the United States and China - slug it out on trade and currency issues.

US president Donald Trump labelled China a "currency manipulator" after the Chinese central bank allowed the renminbi to fall to under RMB7 to the US dollar.

Beijing's action was in response Trump saying on Friday that the US would impose tariffs on another US$300 billion ($459.3b) worth of Chinese goods next month.

In retaliation Beijing asked its state-owned enterprises to stop US agricultural goods purchases.

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Worries about the impact of trade wars on world growth drove the US stocks down by 2.9 per cent on Monday - its biggest fall so far this year - triggering similar falls on other markets.

The New Zealand sharemarket, saved in part by the high proportion of dividend-yield stocks, finished 1.66 per cent down, but off its lows for the day.

"It is as watch and wait, and all eyes will be the Twitter feed of Donald Trump," BNZ economist Doug Steel said.

"It's been a fairly serious bout of volatility - driven by the tariff threat and the response of the Chinese," he said.

"If the US and China got at it hammer and tongs, then that could dent global growth," he said.

"When you get slower world growth, you tend to get lower commodity prices and that's not a good look for New Zealand," Steel said.

Mark Lister, head of private wealth research at Craigs Investment Partners, said he expected the market volatility to continue as trade and currency tensions escalated.

"I can't see anything in the short term that's really going to change that," he said.

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"It's an unpredictable situation - no one knows how far it will go," he said.

Markets are wary that either side may overplay their hand, Lister said.

"Certainly it looks like it will get worse before it gets any better," he said.

While the market New Zealand sharemarket had softened, Matt Goodson, managing director at Salt Funds Management, 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," Goodson said.

New Zealand's goods and services exports are dominated by three key countries, led by China, then Australia and the United States.

China is New Zealand's single-biggest export market, accounting for around one in every five dollars of sales of goods and services overseas, according to Stats NZ.

New Zealand's exports of all goods and services to China were worth $16.6b for the year ended September 2018, $2.6b more than Australia and almost double the sales to the United States.

Since, 2016, China has consistently been New Zealand's top goods export partner.
China is New Zealand's top export market for major exports including dairy products, logs and wood, and meat for the year ended September 2018.

Stats NZ said the value of these sales has mostly risen over the past three years.