KEY POINTS:
The New Zealand stock exchange fell to a four-month low today after a lower-than-expected interest rate cut in the US sent the sharemarket of the world's biggest economy into a dive.
US stocks slumped overnight amid investor concerns the quarter-point interest rate cut by the US Federal Reserve won't be enough to fend off a potential recession.
New Zealand's Top 50 stock index dropped below 4000 for the first time since August, led by Hallenstein and ING Medical. A group of large cap stocks including Fletcher Building and Sky City also fell.
"The New Zealand market sold off because of the US," said Adrian Vance, a stockbroker at Hamilton Hindin Greene.
"A fair amount of the decline [in the NZ market] was sentiment because the US is the largest in the world."
Mr Vance said that Fletcher Building's exposure to the US, where it this year bought US business Formica, may have contributed to the decline in the stock today. Fletcher Building slumped 27 cents to $11.06.
The NZSE50 Index fell fell 0.68 per cent or 27.39 points to 3999.55 at close. It earlier touched 3977.19.
Contact Energy, which has been sold off over the last couple of weeks, was flat at 819, and Sky City slid 12c to 468 after passing yesterday's deadline for announcing a new chief executive.
Amro equity sales trader Nick McLister said international investors were "predominantly getting a bit sick of being dragged along".
He added that some hedge fund investors were taking their losses and reinvesting elsewhere.
Top stock Telecom among the few to buck the trend, up 2c to 440 on solid turnover.
Software company Diligent Board Member Services had a disappointing debut, closing at 95c - 5c down from its issue price - after negative publicity about its founder.
Diligent "hasn't been as well received as probably they would have hoped, but I think also impacted by the events overnight," Mr McLister said.
The Warehouse slipped 4c to 632 after "a very good run". A media report today said the Red Shed chain had resumed talks with supermarket suitor Woolworths .
Rises included Infratil and Methven, up 3c and 2c to 288 and 207 respectively, Restaurant Brands up a cent to 91c and Air NZ up 2c to 185.
On the downside, Guinness Peat slipped 5c to 170 and Hallenstein Glasson dropped 13c to 370, the latter on sluggish menswear sales.
Oceanagold was one of the worst performers, down 80c or 20 per cent to 310 on thin volume.
A snapshot of how markets around the world have reacted today:
JAPAN
1.20pm (NZT)
Japan's Nikkei opened down 1.35 per cent today after Wall Street tumbled on investor disappointment with a small US rate cut and a rise in the yen, hurting exporters such as Sony Corp US stocks sank on Tuesday after the Federal Reserve cut interest rates by 25 basis points, disappointing investors who had hoped for more aggressive cuts.
The benchmark Nikkei was down 1.9 per cent at 15,733.98, a loss of 310.74 points. The broader TOPIX was down 1.9 per cent at 1,537.82.
AUSTRALIA
12.45pm (NZT)
The Australian stock market has opened lower after US stocks slumped following the Federal Reserve's decision to cut interest rates by a quarter point to 4.25 per cent, disappointing investors who had hoped for a more aggressive reduction.
At 1015 AEDT, the benchmark S&P/ASX200 index was down 90.2 points at 6590.2, while the All Ordinaries had lost 85.6 points at 6652.5.
NEW ZEALAND
10.35am
New Zealand's main share index fell below 4000 for the first time in four months today after Wall Street fell heavily on a less decisive than expected rate cut by the US Federal Reserve.
The NZSX-50 index fell 32.1 points to 3994.9 by 10.20am, having fallen by around the same margin yesterday. Turnover was worth $24 million. Falls outnumbered rises 27 to seven.
US
8.45am (NZT)
US stocks fell sharply this morning after the Federal Reserve cut interest rates by a quarter-percentage point, disappointing investors who had hoped for a more aggressive rate reduction.
The US central bank cut the fed funds rate to help the US economy withstand tightened credit and a prolonged housng slump. While the action was widely expected, some economists had though the Fed might offer a bolder half-point reduction in the rate, which governs overnight lending between banks.
UK
6.30am (NZT)
Leading British shares fell on Tuesday as a slide in banking shares overshadowed a rally in mining group Xstrata, which was buoyed by fresh bid speculation.
The FTSE 100 of top British shares ended down 28.5 points, or 0.4 per cent, at 6,536.9 points, in a day of light trade dominated by anticipation ahead of the US Federal Reserve's policy decision after the European market close.
- WITH NZPA