New Zealand shares were pushed sharply lower yesterday in the down-draught from offshore markets spooked by debt problems in European Countries and a soft US jobs number.
The Dow Jones Industrial Average tumbled 2.61 per cent on Thursday, while the tech-heavy Nasdaq dropped a hefty 2.99 per cent and the broad-market Standard & Poor's 500 3.11 per cent.
"Disappointing economic reports added to jitters created by European debt problems," said Scott Marcouiller at Wells Fargo Advisers.
Market tensions intensified after news that some EU countries in addition to Greece were having problems selling bonds and that the cost of insuring their debt was rising.
The prospect of a debt crisis in EU member states raised concerns about a weaker global economic recovery, said analysts.
Also dampening the mood was a report that new claims for US unemployment benefits rose to 480,000 in the week ending January 30, up 8000 from the prior week's upwardly revised 472,000.
The gloom spread through Asia Pacific markets with Japan's benchmark Nikkei 225 down 2.8 per cent, China's Shanghai Composite Index off 1.6 per cent, and Hong Kong's Hang Seng down 3.2 per cent.
Closer to home, the ASX 200 fell 2.3 per cent, while in New Zealand the NZX-50 ended the day 43.95 points or 1.42 per cent lower at 3104.99.
Adviser Nigel Scott of Craigs Investment Partners said the local market had fallen rapidly on opening but the move had been accentuated by the relatively slim turnover.
Excluding off-market trades or crossings, Scott said it looked as though local investors were staying on the sidelines as they waited for reporting season to begin.
"Many companies of course have had their balance sheets repaired so we're now going to look for evidence of earnings growth."
There was little evidence of any influence from offshore investors who hadn't been active in the New Zealand market for some time.
Scott said the selling that did occur yesterday could well be related to investors reorganising their positions to move more from equities into cash.
"People are going back to a little bit of certainty as the sovereign debt issues come up.
"In New Zealand it's hard to get a handle on what's happening in Greece, Portugal, Ireland and Spain but clearly all of those things are showing up in the price of gilts and the slight return to strength in the US dollar."
