NZ share market opens soft after US, world markets decline

Local stocks look set to fall after another volatile session on Wall Street. Photo / Bloomberg.

The New Zealand share market dropped by just under one per cent in the opening minutes of trade in reaction to widespread weakness on world markets.

By 10.50 am S&P/NZX50 Index was down by 95 points at 10,855 following on from Wall Street's 1.8 per cent decline.

The morning's declines were led by a2 Milk, which dropped by 23 cents to $12.98, and Fisher and Paykel Healthcare, which lost 45c to $17.00.

Earlier, the Dow Jones Industrial Average finished 494 points lower after at one point being down by 600 points, driven by concerns about the US manufacturing sector.
The Dow closed at 26,078.62.

A report from the US Institute of Supply Management (ISM) showed America's manufacturing sector contracted for the second month in a row in September to its lowest point since June, 2009.

The ISM index used to be called the NAPM Survey, which traders nicknamed the "napalm" because of its ability to move markets.

Markets globally have been sharply lower this week as worries about a world economic slowdown start to bite.

In the UK, the share market's FTSE 100 closed more than 3 per cent lower, the largest one day fall since January 2016 and exceeding the decline that followed the UK referendum in June 2016.

Harbour Asset Management portfolio manager Shane Solly said the US decline was driven by weakness in the energy, materials and financial sectors.

"We don't have a big exposure to those sectors here in the New Zealand market but we will get hit by some of the weakness in this whole global meltdown," he said.

Solly said October typically can be volatile due to holidays in various parts of the world coinciding with the release of key economic data.

"It has a history of being a bumpy month."

While the New Zealand share market has been weak in recent days, it has had a phenomenal run.

At today's level, the S&P/NZX50 Index is still more than 2000 points or 25 per cent higher than where it started the year.