KEY POINTS:
Global markets turned sharply downwards today, as a fall in investor confidence led by Wall St dominoes across the Asia-Pacific region.
New Zealand's benchmark index NZX 50 dived another 1.79 percent today, extending its losing streak to 12 days, during which the benchmark index has slumped over 10 percent and wiped $5 billion off values.
Not one stock in the top 50 index was up in trading on the NZX this morning.
Market leader Telecom was down 13c to $4.00, No 2, Fletcher Building down 25c to $9.95 and No.3 stock, Contact Energy was down 15c to $7.60.
Australia
The Australian stock market hemorrhaged more than 3 per cent in early trading today, following heavy falls on Wall Street overnight.
The Australian sharemarket rout extends the run of losses beyond 10 per cent, representing A$150bn in value wiped out so far this year.
The 10-day losing streak marks the longest in Australian sharemarket history.
BHP Billiton lost as much as A$2 to A$34.50, Rio Tinto fell A$8.60 to A$110 and Commonwealth Bank sank A$1.22 to A$50.31.
Japan
Japan's benchmark stock averages fell more than 2 per cent today, amid growing fears of a US recession.
Toyota Motor Corp and Sony Corp were flooded with sell orders as the yen gained against the dollar.
As of 1pm (NZT), the Nikkei was down 2.6 per cent at 13,432.03 and the broader TOPIX index was down 2.5 per cent at 1,298.13.
US plunge
Wall St plunged further this morning (NZ time), sending the S&P 500 down more than 2 per cent and driving the Dow industrial average down more than 1,000 points since the start of 2008, as investors worried about the outlook for the US economy.
The Dow Jones industrial average was down 237.20 points, or 1.91 per cent, at 12,228.96. The Standard & Poor's 500 Index was down 30.49 points, or 2.22 per cent, at 1,342.71. The Nasdaq Composite Index was down 34.05 points, or 1.42 per cent, at 2,360.54.
Merrill Lynch & Co fueled more concerns about the health of the financial sector when it reported about US$16 billion in mortgage-related write-downs and adjustments in the worst quarter in the company's history.
Shares of Merrill plummeted on the news.
"The US economy is slowing drastically," said Peter Jankovskis, director of research at OakBrook Investments LLC in Lisle, Illinois.
"And more write-down news from Merrill just raises the question, when is the last one going to occur?"
Federal Reserve Chairman Ben Bernanke reiterated that the Fed was ready to employ a "fiscal stimulus package" to counter recession risks.
"The fact Mr Bernanke is urging Congress to enact stimulus is just one more piece of evidence for people who believe the economy is heading for recession," Jankovskis said. "If he is doing that, things must be difficult."
Investors were also hit with more bad news on housing as a government report showed that building permits for new homes last month slumped to the slowest figure since 1993.
Fears that a US recession may lie ahead has roiled global stock markets in recent weeks.
A Reuters poll of 250 economists from the Group of Seven major developed economies today said the United States now faces a 45 per cent chance of recession.
IT'S A BEAR, NO DOUBT ABOUT IT
This further slump in share prices today erased doubt the New Zealand market is officially in a bear phase, rather than a mere "correction".
The benchmark index dived another 2.2 per cent today, extending its losing streak to 12 days, during which the benchmark index has slumped over 10 per cent and wiped $5 billion off values.
Since its peak in mid-October, the market has lost 15 per cent. A market "correction" officially occurs when it falls 10 per cent from a peak, but this slump is far worse than that.
However, it has had nothing of the drama and panic of the 1987 sharemarket crash when Wall Street fell 23 per cent in a single session. Volumes were moderate. Even so, sentiment has been knocked heavily.
"Investor confidence is being severely tested by almost the despair that is becoming evident in the US," First NZ Capital broker Barry Lindsay.
His firm is advising Mum and Dad investors to sit tight so long as they think each stock they are invested in can weather a storm.
Local firms in general had strong balance sheets and were trading well, he said. Bearish sentiment was being driven by the credit crisis in the US that had seen banks write down over US$500 billion in bad debts.
There was another ugly session on Wall Street today, which saw key indices slump 2 to 3 per cent.
Stocks there dropped heavily as data showing a plunge in regional factory activity and news of a hefty loss by brokerage firm Merrill Lynch & Co fanned worries about the economy.
Merrill Lynch fuelled more concerns about the health of the financial sector when it reported about US$16 billion ($21b) in mortgage-related write-downs and adjustments in the worst quarter in the company's history.
The Dow Jones industrial average ended down 307.03 points, or 2.46 per cent, unofficially at 12,159.13 while the broader Standard & Poor's 500 Index plunged even more heavily, down 39.91 points, or 2.91 per cent, to finish unofficially at 1333.29.
"Fear and pessimism is really beginning to dominate Wall Street," said Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago.
"More data showed weakness in the economy, and Merrill Lynch took a write-down the size of which, until recently, would have seemed unfathomable."
Here, the local NZSX-50 index fell 82 points to 3648, its lowest in 15 months. The index, begun in December 2000, has never before had more than seven losing sessions in succession. It has fallen from 4062 since December 27 and from 4332 in October.
Not one stock in the top 50 index was up today.
Market leader Telecom was down 13c to $4.00, No 2, Fletcher Building down 25c to $9.95 and No.3 stock, Contact Energy was down 15c to $7.60.
Mr Lindsay said there were growing signs from leading indicators that the US was sliding into recession.
"That's what's troubling investors. It's given rise to a bear market. I thought for a while it was just a correction. The extent of the losses has gone beyond a correction into a decline."
Corrections are often described by analysts as "healthy" before an uptrend resumed. But bear markets are something else, where sentiment overwhelms fundamentals and economics and few are willing to predict when the bottom will be reached.
Mr Lindsay said local investors had been sanguine and no panic evident. But many had been ringing for advice.
"We are having to do a bit of reassuring," he said. He said it was senseless to sell because everyone was. The more prolonged the fall the more risky it was to sell.
Institutions, were likely to be selectively buying stocks into the fall, he said. "For every seller, there is a buyer."
US Federal Reserve Chairman Ben Bernanke today echoed the bleak assessment of the economy in comments to lawmakers, reiterating that the Fed was ready to act aggressively and throwing his support behind other efforts to counter the risk of recession.
- REUTERS, NZPA, AAP