KEY POINTS:
The local sharemarket closed lower for a third session on the trot yesterday, although its losses were far smaller than Monday and Friday's 2 per cent plunges.
The NZX-50 closed 10.8 points or 0.32 per cent lower at 3418.633, having recovered much of its losses early in the session and actually, tentatively, moved into positive territory at one point during the session, which was marked by light turnover.
"It's very much a wait-and-see environment," said ABN Amro Craigs broker Nigel Scott.
"Australasia has had some pretty big hits in the last couple of days and you don't always keep on heading south," he said.
"Much as markets are trying to find a level, they're waiting for another raft of information about US investment banks and the Fed."
The NZX-50's down-and-up down day was a small-scale version of Monday's trading on Wall St, where the Dow Jones industrial average closed marginally in positive territory in a whippy day's trade after the US Federal Reserve's extraordinary move to provide short-term emergency loans to struggling US investment banks.
That and other unusual measures by the Fed came hard on the heels of a JPMorgan Chase & Co deal to buy rival Bear Stearns Cos for US$236.2 million ($293.7 million) to stave off the total collapse of the venerable investment house.
The Fed's actions come as fears have spread that other financial houses could also be on shaky ground.
Three of Wall St's biggest banks report their fourth quarter results in coming days, with Goldman Sachs, so far one of the least affected by the credit crunch, having released its result overnight.
All eyes will also be on the Fed which, this morning, was expected to slash its key interest rate by as much as one percentage point to 2 per cent.
Should the banks or the Fed disappoint the markets, equity markets are likely to resume the slide which began late last week as it becomes increasingly clear the credit crunch will run for some time to come.
Yesterday, however, like the NZX, the ASX-200 also appeared to be enjoying some respite, closing 0.9 points lower at 5086.1.
Broker Kevin Rendell, of Wellington firm Gould, Steele and Co, said equity markets around the world were in uncharted territory.
"We haven't seen anything like this in our experience and I've been around a few years.
"Probably, if anything, it's closer to the early seventies bear market that resulted from the oil shock, rather than what we saw in '87, the end of the tech boom, or even the Asian crisis in that it's a sustained fall and the thing that created the shock has been totally disruptive to normal business activity.
"There were several false dawns in that bear market as people thought things had improved only to see indices rise, stall and then fall, with the next trough being deeper than the last. It probably took 18 months to work its way through."
