KEY POINTS:
New Zealand's sharemarket fell yesterday but its lack of significant financial stocks and holidays on Asian markets lent some shelter from the deepening US financial crisis.
The local market was one of the first in the world to trade yesterday after a fresh wave of bad news flowed out of the US financial sector.
But the benchmark NZX-50 index ended the session with little more than a bruising, losing 41.8 points or 1.26 per cent to close at 3319.90.
Most top stocks closed lower including market leader Telecom which lost 4c to plumb yet another 15 1/2 year low of $2.93.
David Fear of Citigroup said the local impact could have been greater but several markets in Asia, including Japan, Hong Kong, South Korea and China, were closed for public holidays.
However the Australian market fared worse, closing down 86.1 points, or 1.76 per cent, lower at 4817.7 with banks and other financial stocks hit hardest.
Fear saw little prospect that the flow of bad news and consequent sharemarket volatility would end soon.
"Things are not improving out there, in fact they're getting worse."
The bad US news also weighed on the greenback, which wilted against most other currencies including the kiwi dollar. Having closed at US65.37c on Friday, it opened at US66.43c yesterday and continued to rise, closing at US66.87c.
BNZ currency strategist Danica Hampton said growing worries about the health of the US financial sector would likely raise expectations of US rate cuts which would in turn weigh further on the greenback and provide more support to currencies such as the kiwi.
The financial turmoil prompted the Reserve Bank of Australia to inject a far bigger than usual A$1.3 billion ($1.59 billion) into its financial system in what analysts said was a move to soothe market jitters.
But a Reserve Bank of New Zealand spokeswoman yesterday said the RBNZ had not injected any extra cash into New Zealand's financial system.
