KEY POINTS:
The New Zealand stock exchange has hit its lowest point in 15 months after a sharp dive today followed a downward trend in the first two weeks of the year.
The market had shed 1.3 per cent of its value by 3.30pm. The benchmark NZSX-50 index was down around 50 points at 3818. That represents the lowest point the index has been at since November 2006.
The Australian stock market was also deep in the red this morning. At noon (NZT), the ASX200 index was down 28.2 points lower at 5953 while the All Ordinaries had fallen 30.6 points to 6023.8.
Hamilton Hindin Greene brokerage director Grant Williamson said the drop can be put down to a low volume of shares being traded and the volatility of the US market.
Mr Williamson said there is no panicking amongst the retail investors.
"I'm sure there are a few small retail investors bowing out but we're certainly not seeing it among our client base," Mr Williamson said.
He said there is some profit taking going on amongst the stocks that did well last year.
"The volumes haven't picked up since Christmas. I think most investors are keeping a close eye on the events in America and are prepared to ride it out at this stage," Mr Williams said.
And it could be a while until the market bounces back, he said.
"America has still got some issues it needs to sort out and is likely to remain volatile so I don't see any substantial improvement in the New Zealand market until that American market really starts to settle down which will at least be a couple of months away," Mr Williams said.
He said meanwhile there are some bargains available for investors with cash.
10.30am MARKET REPORT
Earlier, the benchmark NZSX-50 index was down 21.23 points or 0.66 per cent at 3850.95 in the first 20 minutes of trading.
Telecom fell 3c to 417, Contact Energy shed 4c to 823, Fletcher Building lost 9c to 1064, Fisher & Paykel Healthcare lost 2c to 339, and F&P Appliances lost 6c to 312.
Other top 50 stocks to fall included GPG, down 4c to 163, NZX 12c to 870, Tower 4c to 220 and Trustpower 5c to 809.
Going against the trend were carpet maker Cavalier which firmed 2c to 282 and NZ Refining 9c to 790.
Overall there were 26 falls and three rises among the 71 stocks that traded early on the market.
US stocks fell sharply on Friday, capping a third consecutive weekly decline, on a warning by American Express Co of mounting credit card defaults and a slowdown in consumer spending.
The Dow Jones industrial average ended down 246.79 points, or 1.92 per cent, at 12,606.30.
The Standard & Poor's 500 index fell 19.31 points, or 1.36 per cent, to 1401.02. The Nasdaq composite index dropped 48.58 points, or 1.95 per cent, at 2439.94.
A New York Times report that Merrill Lynch was expected to suffer US$15 billion ($19.42b) in losses stemming from soured mortgage investments added to sharemarket jitters.
Britain's FTSE 100 shed 0.3 per cent to end last week at 6202.0 points, while the pan-European FTSEurofirst 300 benchmark hit its lowest level in over a year before ending down 0.5 per cent.
- NZPA, additional reporting by Edward Gay
