KEY POINTS:
Global markets cannot seem to arrest the inexorable slide they have been on since the start of the year, as the fallout from the US sub-prime mortgage crisis expands to envelop banks and financial institutions everywhere.
Yesterday Adam Bennett in this story outlined the steady fall of the NZ sharemarket since January 1.
Economists have been reluctant to stick their neck out and say outright that we are headed for a recession, but leading Wall St bankers Goldman Sachs yesterday afternoon came out and said it in a newsletter to their clients - the risks of a US-led recession are magnifying.
No single market can be immune in the face of such a loss in investor confidence. The New Zealand market has now lost more than $2 billion in value since opening for business on January 3.
Our benchmark NZSX-50 index closed down 0.3 per cent, or 12.3 points, at 3899.9 yesterday.
In the more long-term picture, the NZSX-50 has shed 10 per cent of its value since it reached a peak of 4332.29 points on October 2.
Here's a quick wrap of the fragile state of the world's markets over the past 12 hours.
US
US stocks fell this morning, led lower by tech shares as investors worried about the impact of a slowing economy on the outlook for profits.
Shares of Apple Inc were among the top drags on both the Nasdaq and the S&P 500, down 1.8 per cent at US$176.15. Technology is one sector seen as more vulnerable to a slowdown in business and consumer spending.
UK
Britain's top shares fell 0.8 per cent today after the Bank of England (BoE) kept interest rates on hold, but Sainsbury triumphed over the gloom thanks to an upbeat trading update.
The FTSE 100 ended down 50 points at 6,222.7.
EUROPE
European stocks pared gains to turn briefly negative before trading flat today, as weak energy shares offset a rebound in the recently hammered retail sector.
At 0943 GMT, the FTSEurofirst 300 index of top European shares was up 0.03 per cent at 1,449.49 points. Investors remained cautious ahead of interest rate decisions by both the Bank of England and the European Central Bank expected later in the session.
HONG KONG
Hong Kong share prices closed 1.40 per cent lower last night (NZT) as investors dumped property stocks on talk that some investors plan to sell a significant amount of shares in Cheung Kong, dealers said.
They said Chinese energy companies also led the market's decline after Beijing said it would freeze energy prices.
JAPAN
Japanese stocks slid last night (NZT) to an 18-month closing low, dragged down by automakers and property shares sold on worries about the US economy and lingering fears about the impact of the global credit crunch. Long-term concerns about Japan's economy were fanned by a Goldman Sachs report saying the world's second-largest economy was in danger of following the United States into recession later this year.
The report was later reinforced by the release of the index of leading economic indicators, which showed a fall to a preliminary 10.0 in November from 18.2 in October. A reading below 50 suggests a contraction. "The mood domestically isn't very good and since exporters drive the economy, a poor showing by the US economy will of course have an impact," said Takahiko Murai, general manager of equities at Nozomi Securities.
"The Japanese government talks about 2 per cent growth but this will clearly be hard. I myself believe we may be heading for no growth at all."
AUSTRALIA
The Australian stock market closed in negative territory last night (NZT) amid continuing recession fears in the United States and profit taking from bargain hunters.
At the close, the benchmark S&P/ASX200 index was down nine points at 6078.7, while the All Ordinaries lost 12.2 points to 6147.3.
Austock Securities senior client advisor Michael Heffernan said the local market was showing signs of nervousness in the face of recession fears in the United States.
"The tone of the market very recently and also over the last couple of months has been very sluggish, there is a cloak of nervousness over the market," Mr Heffernan said.
"Good shares have been belted down and people see there are a few bargains around the place.
"Certainly the US slowdown that is happening is really filtering through to the Australian sharemarket.'
- REUTERS, NZHERALD STAFF
