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NZX50 opens down 1.97% on "catch-up" day

New Zealand markets are playing catchup today, after a rocky day of global trading yesterday. The NZX was closed for Waitangi Day yesterday, but the S&P/NZX50 was down 1.97% at market open today.

Within the index, 47 stocks had fallen, with three up, on turnover of about $35 million. “I think we’ll have a bit of a catch-up day today,” Hamilton Hindin Greene investment adviser Grant Davies says. “At the moment, the Dow is broadly flat. But I’d expect our fair share of selling today.”

The sell-off started on Wall Street on Friday after strong US jobs data fuelled concerns US inflation will accelerate faster. Markets across Europe and Asia followed suit on Monday. The Dow Jones Industrial Average surged 2.3% overnight following its largest ever one-day point drop yesterday.

At today's close, the blue-chip Wall Street index had recovered some ground, up 567.02 points to 24,912.77 – about half of the 1175-point drop, or 4.6%, to 24,346. The S&P 500, which fell 4.1%, recovered by 1.7% to 2695.14, while the Nasdaq Composite, which fell 3.8%, closed up 2.1% to 7115.88. In Europe, the DAX was down 2.25%, the CAC 40 down 2.24%, the Stoxx 600 down 2.13% and the FTSE MIB down 1.80%. The ASX200 opened down 2.8% yesterday.

In early afternoon trading, the benchmark Australian index was down 3.40% and the All Ordinaries down 3.41%. Both indexes closed down 3.3%. Asian markets also followed the US down, with the Nikkei losing 4.73%, the Hang Seng 5.12% and Shanghai 3.38%.

Correction expected

“A healthy correction is a good way to put it at the moment, the markets are giving back some of the amazing gains we’ve had so far this year,” Mr Davies says.

Having ended 2017 at 8,398.08, the NZX50 has now dropped 3.7 percent in 2018. However, it hit a record 8,455.55 on Jan. 5 and has booked consecutive gains for the past 13 months, meaning it's up 14 percent from this time a year ago when it closed at 7067.05. “It’s certainly not panic stations yet. It’s a reminder to people who’ve had eight or nine years of pretty sold returns that the market can have its volatile moments and you’ve got to make sure your portfolio is in a position to handle that," he says.

Mr Davies points out the Dow is back to levels seen in December, so has given back the gains made in the past month-and-a-half. “Obviously there’s plenty of water to go under the bridge with this yet, but if you look at the fundamentals of the market, most companies are still growing their earnings. “Every single OECD country is having positive economic growth at the moment, so all of those things are pointing in the right direction… I don’t think anyone’s panicking just yet.”


Courtesy of the National Business Review

Filed under General \ Grant Davies \ NBR
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