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The New Zealand sharemarket slumped for a second day yesterday but avoided the worst of the latest credit crunch-driven sell off on Wall St where investors are fearful of the return of 1970s-style "stagflation".
The benchmark NZSX-50 index closed 36.5 points or 0.93 per cent lower at 3926.12, adding to Monday's 1.16 per cent loss. In early afternoon trade it was as low as 3902.62 - just a few points above the low it hit in August when the credit crunch first sent markets around the world tumbling.
"It's purely overseas leads that we're moving on at the moment," said Hamilton, Hindin, Greene broker James Smalley.
In the US on Monday, stocks fell on concerns that a persistent housing slump could see economic growth stagnate while rising prices for food and energy boost inflation, a damaging combination last seen in the 1970s.
US Government reports last week showed rising price pressures in November. Sentiment among US home builders was at a record low for a third consecutive month in December.
The Dow Jones industrial average slid 1.29 per cent, the Standard & Poor's 500 Index dropped 1.5 per cent and the Nasdaq Composite Index tumbled 2.32 per cent.
The US sentiment also weighed heavily on Australia's ASX, already reeling from the meltdown of leading commercial property firm Centro and falling metal prices.
