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22 Feb 2018 16:02
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  •   Home > News > Business

    NZ shares drop 2pc in early trading

    The New Zealand stock market has followed overseas markets down but not as severely as some may have feared.

    New Zealand shares fell 2 per cent as the market opened, following global sharemarkets lower, although selling was not as severe as some market watchers feared.

    As at 10.25am on Wednesday, the S/NZX50 Index was down 158.6 points, or 1.9 per cent, to 8083.23. WIthin the index, 47 stocks had fallen, with three up, on turnover of about $35 million.

    The sell-off started on Wall Street on Friday after strong US jobs data fuelled concerns US inflation will accelerate faster. Markets across Europe and Asia followed suit on Monday, with the local benchmark index down 2.1 per cent, though it escaped heavy selling yesterday as it was closed for the Waitangi Day holiday.

    US markets began recovering on Wednesday morning. Just after 10am (NZT), the S500 was up 1.6 per cent, the Dow Jones Index had gained 2.3 per cent, and the NASDAQ 100 had risen 2.4 per cent.

    Having ended 2017 at 8398.08, the NZX50 has now dropped 3.7 per cent in 2018. However, it hit a record 8455.55 on January 5 and has booked consecutive gains for the past 13 months.

    "We've gone through a period of no volatility at all, so the daily movements have been miniscule in terms of percentages. We've now had this trip up and things are unwinding a bit," said Harbour Asset Management's Craig Stent.

    "We have had a good run, we had a good year last year - it's not just a straight line up all the time.

    "The bond yields have moved up, and when that happens you can see a bit of a pause in equity markets," Mr Stent said.

    "It's not like anyone is really expecting a recession. Global data and economic activity are still pretty strong, but we are seeing an unwind of quantitative easing and gradual increase in interest rates globally."

    Earnings season will kick off later this week, with SkyCity Entertainment Group set to report on Friday.

    "Early indications are that things are okay from corporates," Mr Stent said.


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