A rout on global sharemarkets has slashed billions of dollars off the value of investments, dragging New Zealand stocks to a four-month low.
Investors have refocused their attention on the stumbling US economy and Europe's sovereign debt crisis despite US President Barack Obama today signing the debt level agreement into law, preventing a default.
Across the Tasman the Australian sharemarket lost A$25 billion ($31 billion) within minutes of opening, adding to sharp declines yesterday which had already lopped about A$19 billion off the market's value.
The Australian dollar also extended its steep slide sparked by yesterday's decision by the Reserve Bank of Australia to leave interest rates on hold.
On Wall Street the Standard & Poor's 500 Index fell for a seventh day, with the exchange shedding 2.4 per cent to 1,254.82 on the back of weaker-than-expected consumer spending. Europe's Stoxx 600 fell 1.9 per cent on fears that Italy may be dragged into the euro zone debt crisis.
New Zealand's benchmark index fell 25.66 points, or 0.8 per cent, to 3371.33 by midday, the lowest level since March 23. Turnover was $42.6 million.
The New Zealand dollar also took a hit, falling below US87 cents by midday, as investors turned away from riskier, or higher-yielding, assets.
However, a broker says New Zealand stocks have fared relatively well.
Mint Asset Management portfolio manager Shane Jolly said New Zealand's retreat was still less than in other markets, such as Australia's S&P/ASX 200 Index which suffered a 2 per cent fall.
''At the moment we are a star performer in the global markets. It's cold comfort. But the New Zealand economy is relatively attractive compared to other markets,'' Jolly said.
''If and when other markets take off, then we may not be ahead of the markets.''
Tyndall Investment Management portfolio manager Rickey Ward said that over the last 12 months the US economy was relatively robust, but in the last two to three months it came off the boil because of the uncertainty around US debt.
Ward said there was still investor nervousness in global markets despite the US deal showing it was able to repay its obligations.
''There is still a hell of a lot of work to do and be completed for long-term economic structural change,'' said Ward.
Investors could see the world was still not experiencing any growth, he said.
NEW ZEALAND STOCKS
Dual-listed stocks led decliners, with APN News & Media reporting the biggest fall of 3.7 per cent to $1.32 on the NZX. Wealth manager AMP dropped 2.9 percent to $5.44, and banks Westpac and ANZ fell 2.5 per cent to $24.85 and 2.3 percent to $25.40 respectively.
Market operator NZX fell 2.5 per cent to $2.31 after it reported a 45 per cent increase in activity on its equity market in July compared to the same month a year ago, while debt market activity fell 26.3 per cent in the month over the same period.
Shares in Vital Healthcare Property Trust fell 0.9 per cent to $1.15 after it was revealed that negotiations to internalise the property investor's management contract stalled over a $2 million price gap, according to the independent directors of the ANZ-owned manager.
Sky City shares fell 1.1 per cent to $3.61 after news that former New Zealand Rugby Union head Chris Moller has been tapped to take over as chairman of the casino company when Rod McGeoch retires at the 2012 annual meeting.
Allied Farmers, the rural services company which failed to transform itself into a major lender, climbed 0.3c to 1c after it announced it would be selling some of its merchandising stores to rural supplies chain RD1.
RD1 will buy six stores and lease one of Allied's 11 retail outlets, adding to the 57 stores it has nationwide. Detail on the price of the deal wasn't disclosed.
NZ Oil & Gas, the energy exploration and production company, fell 1.5 per cent to 68 cents, as investors continue to grapple with the implications of the Tui oil field downgrade.
Australian operator AWE last month said probable reserves were about 20 per cent lower than originally thought. NZOG owns a 12.5 per cent stake in the field.
National carrier Air New Zealand fell 1.7 percent to $1.16 as oil prices continued to track upwards. ICE Brent Crude futures were last trading at US$116.45 a barrel, up from US$115.94 yesterday.
Data out today showed that Auckland homeowners put just 1,050 new properties up for sale last month, the lowest number in a decade.
Barfoot & Thompson, the city's biggest real estate firm, had just 4,830 properties on its books last month, the smallest number for four years. Still, Barfoot sold 778 homes in July, up almost 21 per cent from the same month though down 11 per cent from June. The average sale price was $530,191, down 1 per cent from July 2010, and up by some $10,000 in June.
The New Zealand dollar recently traded at US86.21c, down from US87.38c yesterday, with sentiment on global markets sapping demand for growth-linked currencies such as the kiwi and Australian dollar.
The kiwi also came under pressure after the price of dairy products fell for the fourth sale in a row at Fonterra Cooperative Group's latest online auction. The GDT-TWI Price Index slipping 1.3 per cent to US$3,716 a metric tonne, tracking a broader decline in global commodity prices.
