NZ stocks drop by 1.7 pct after 1000-point US rout

NZ stocks opened weaker after another decline on Wall St.

The New Zealand sharemarket largely withstood a 1000-point decline on Wall Street to trade 1.7 per cent down by late morning.

By 11.25 am the NZX-50 index was down by 139 points at 8037.

Brokers said the market was holding relatively well in the face of a 1,032-point (4.15 per cent) decline on the Dow Jones Industrial index.

However, the local market's reaction was skewed by the fact that Fletcher Building - a major constituent of the NZX50 - is in a trading halt pending a review of key construction projects. Fletcher has said it expects the trading halt to continue until Monday morning.

Wall Street's ructions followed another turbulent day on US bonds markets, with the bellwether US 10-year treasury bond nearing 2.90 per cent before retreating to 2.82 per cent.

International markets have been unsettled since US labour data last week suggested inflation, and interest rates, may finally be on the move in the world's biggest economy.

America's S&P 500 index ended today's session 3.8 per cent down to a fresh two-month low, wiping out a rebound earlier in the week.

The index is now 10.2 per cent down from its January high — thereby fitting the definition of a market correction.

Mark Lister, head of private wealth research at Craigs Investment Partners, said the New Zealand market had held well, considering the fallout in world markets, and that it was still far from being in the 10 per cent correction territory.

"The local market is holding pretty well, considering the offshore moves," Lister said.
"Of course, if we had Fletcher Building out of a trading halt it might have been a different story," he said. At current levels, the NZX50 is 4.5 per cent down from its January high.