New Zealand’s share market fell by 1.15 per cent this morning after Wall Street tumbled amid fears of an economic recession in the US.
Wall Street’s Dow Jones Index fell by 800 points, or 3 per cent cent, in the wake of the US bond curve turning negative for the first time in a decade.
The so-called inversion has correctly predicted many past recessions and is the loudest warning bell yet about a possible recession ahead.
The 3 per cent fall was Wall Street’s biggest one-day fall so far this year.
New Zealand’s share market reacted by dropping by 1.15 per cent in the opening minutes of trade.
By 10.05 am the S&P/NZX50 index was down by 125 points at 10,725 following on from a 3 per cent decline in the Dow Jones index.
“The market has held up better than Wall Street, which is often the case,” Mark Lister, head of private wealth research at Craigs Investment Partners said.
Prices were weaker across the board, with the biggest moves in the “growth” stocks, he said.
Specialist Glenn Carrel works at his post on the floor of the New York Stock Exchange on Wednesday after stocks fell sharply. Photo / AP
The 10-year Treasury bond yield fell below 1.6 per cent, dropping just below the yield of the 2-year Treasury bond, as nervousness mounted about the state of the world economy following news that the German economy – Europe’s biggest – shrank in the second quarter.
Worsening US-China trade relations was cited as another factor, as was news that China’s industrial production grew at the weakest rate in 17 years last month.
Harbour Asset Management portfolio manager Shane Solly said Wall Street’s sharp decline would take some confidence out of the local market.