KEY POINTS:
The New Zealand stock market recovered a little by the end of trading today, after it plunged about 3 per cent during the day in the fallout from Wall Street's woes.
The market plummeted in the first few minutes after opening, but after the initial dive it fluctuated in a much smaller range during the day before the NZSX-50 index ended down 2.79 per cent at 3227.3.
Forty-seven million shares were traded at a value of $132 million.
Auckland Airport was the only company in the NZSX-50 to register a net gain, and it finished 1 per cent up at 202 on the sale of 2.3 million shares. It went down to 196 in the first few minutes of trading after starting the day at 200.
All other top-50 stocks lost ground, aside from ING Medical Properties which closed up a cent at 115.
Stephen Wright of ASB Securities said New Zealand had a one-day headstart on the US, but he still hadn't expected it to be down almost 3 per cent.
No real conclusions could be made because turnover was average "and you can't stop people selling", he said.
Market leaders with greater overseas ownership suffered most.
"But generally speaking nobody has been spared. Smaller caps with no exposure to any of the world events have been hit."
The New Zealand market had become less volatile than others, he said.
"We don't have financials and we don't have resources, so there's two big sources of volatility compared with Australia."
Stocks to suffer most today were led by AMP, which on low trading volume, lost 94c, or 10.27 per cent, to finish at 821.
Fletcher Building started at 736, but dropped 3.94 per cent to 707.
Guinness Peat Group started the day at 127 and finished at 123.
Fisher & Paykel Appliances lost 5c to 172, while Fisher & Paykel Healthcare also suffered, losing 8c to 308.
Telecom was the most heavily traded top-50 stock. It started at 293 before it called it a day 4.4 per cent down at 280.
Its reign as leader by market capitalisation could be under threat, as Contact Energy, which finished 2.25 per cent down at 870, could overtake it at any time.
Telecom was worth $5.112 billion at the end of today, closely followed by Contact at $5.017b.
Mr Wright said it would be a significant from an index point of view, but Contact could not be fully represented in the New Zealand index because it was half-owned by Origin Energy.
"The lower Telecom goes the less incentive that institutions have to own it. So unfortunately it does feed on itself."
The local market's jitters followed the worst day for US shares since markets reopened after the attacks of September 11, 2001.
The weekend saw investment bank Lehman Brothers file for bankruptcy protection and Merrill Lynch forced to accept a takeover by Bank of America Corp.
The benchmark Standard & Poor's 500 index fell 4.7 per cent, to 1192.70, tumbling to its lowest close since October 2005.
The Dow Jones industrial average slid 504.48 points, or 4.4 per cent, to 10,917.51, while the Nasdaq Composite Index dropped 3.6 per cent, to 2179.91.
Yesterday the New Zealand sharemarket fell 1.2 per cent, or 41.8 points, as investors watched the US troubles unfold.
Australian bank ANZ, which owns New Zealand's largest bank, ANZ-National, has issued a statement saying it has $US120 million of exposure to Lehman Brothers and its subsidiaries.
Its "counterparty exposure" was made up of $US28m to Lehmans itself, with $US92m to subsidiaries.
"ANZ is not in a position at this time to provide an estimate of the likely loss, if any. In particular we note that the Lehman subsidiaries are not part of the Chapter 11 filing.
Lehman Bros are also amongst 800 counterparties included in the underlying assets for ANZ's credit intermediation trades; their default has little impact on the level of first loss protection," said the statement.
National Australia Bank, which owns the BNZ, says its total exposure to the Lehman group of companies is less than A$100 million ($124.14).
"As a result of Lehman Bros Holding International filing for Chapter 11 Bankruptcy in the United States, National Australia Bank today said its exposure to the Lehman group of companies is less than A$100 million, including any exposure held in conduits," NAB said in a statement.
Most commentators are saying banks in this part of the world are much stronger and safer than those in the US, who have much larger exposure to the collapsed US housing sector.
In the US, the Dow Jones industrial average lost more than 500 points, more than 4 per cent, its steepest point drop since the day the stock market reopened after the Sept. 11, 2001, attacks. About $700 billion evaporated from retirement plans, government pension funds and other investment portfolios.
The day followed one of Wall Street's most agonising weekends ever, which saw investment bank Lehman Brothers file for bankruptcy protection and Merrill Lynch forced to accept a takeover by Bank of America Corp. Concerns were also mounting about insurer AIG.
The benchmark Standard & Poor's 500 index fell 4.7 per cent, to 1192.70, tumbling to its lowest close since October 2005.
The Dow Jones industrial average slid 504.48 points, or 4.4 per cent, to 10,917.51, while the Nasdaq Composite Index dropped 3.6 per cent, to 2179.91.
The New Zealand dollar was also shaken roughly overnight as equity markets in the United States and Europe fell sharply.
The day followed one of Wall Street's most agonising weekends ever, which saw the demise of investment bank Lehman Brothers and forced Merrill Lynch to accept a takeover by Bank of America Corp.
Concerns were also mounting about insurer AIG, which is reviewing its operations and discussing alternatives with outside parties to shore up its business amid concern the world's largest insurer could need billions of dollars to strengthen its balance sheet.
Financial services companies' shares led a broad and steep decline in major indexes as investors worried about the impact of the latest twists in the credit crisis on the economy and the outlook for profits.
The 158-year-old Lehman Brothers filed for bankruptcy protection in the biggest filing ever and said it was trying to sell off key business units.
Bank of America Corp said it is snapping up Merrill Lynch & Co Inc in a US$50 billion ($75.8b) all-stock transaction.
President George W Bush signalled that the government would not continue to bail out Wall Street, saying only that "we are working to reduce disruptions and minimize the impact of these financial market developments on the broader economy".
From late yesterday perceived safe-haven currencies, the US dollar and yen, were in demand, sending high yeilding currencies such as the NZ and Australian dollars, the euro and sterling lower.
Bank of New Zealand currency strategist Danica Hampton said escalating risk aversion and concern that problems in the US financial sector will spill across into global issues were taking a toll on risk sensitive currencies, such as the kiwi against the yen.
Having managed to hold gains against the euro for most of the New York trading session, the greenback fell in the wake of US equities as they extended losses in late trading.
The yen also rallied on the unwinding of carry trades in which investors borrow low yielding currencies such as the yen to invest in higher yielding riskier assets such as the NZ dollar.
- NZPA, AP, NZ HERALD STAFF
