KEY POINTS:
The New Zealand sharemarket hit a new low for the year yesterday, dragged down by fears of a further interest rate rise in Australia.
The NZX-50 closed down 1.1 per cent at 3572.9 points while Australia's benchmark ASX-200 declined 2.13 per cent to 5537.6 points.
The Australian market suffered after its Reserve Bank gave strong indications that another interest rate rise was likely, causing investors to pull their money out of stocks.
In New Zealand Fletcher Building, which announces its results tomorrow, was hardest hit as Australian investors pulled out on fears about the New Zealand housing market. Market commentators said the New Zealand fall was a continuation of the drift that the NZX had been experiencing since October as a result of the credit crunch, exacerbated yesterday by Australia's news.
Brook Asset Management fund manager Paul Glass said Fletcher Building had many Australian investors so it was no surprise the company had suffered.
"There is increasing concern that after a very long period in New Zealand of growth the market is going to have a meltdown.
"Until we get some clarity around the international credit position we will continue to see market volatility."
First New Zealand Capital research manager Barry Lindsay said New Zealand was being reasonably resilient compared with Australia but there was not a lot of good news to get excited about.
He said it would probably take a positive change on Wall St to see a positive upswing in New Zealand.
Hamilton Hinton Green broker Grant Williamson said he expected to see more of an improvement in the market next week with more local companies making their annual reports.
