NZX dodges bullet as Wall St recovers

Fears of a steep dive on the New Zealand sharemarket have been averted for now, after a partial recovery on Wall Street helped take the sting out of what had been expected to be an ugly day’s trading.

The NZX 50 index opened down 1.9 per cent yesterday after dodging the worst of the global correction thanks to the Waitangi Day holiday on Tuesday.

It had cut its losses to just 0.8 per cent, or 69 points, shortly before 1pm, as investors wondered if the correction that has rattled global markets might be over and began hunting for bargains.

Sharemarkets around the world fell sharply on Tuesday, when New Zealand financial markets were closed.

But the S&P 500 index regained 1.75 per cent and the Nasdaq composite index closed up 2.1 per cent on Wednesday morning, New Zealand time, just in time for the reopening of the New Zealand stock exchange.

The gains in the United States represented a significant shift in sentiment, as the Nasdaq had initially opened 2 per cent lower overnight on Tuesday.

The Australian ASX 200 index was up 1.2 per cent at lunchtime yesterday, after dropping 3.2 per cent on Tuesday when it experienced its worst one-day point fall since September 2015.

Auckland International Airport and Fisher & Paykel Healthcare – which have been trading places as the top stocks on the NZX over the past few months – were

down 1.4 per cent and 0.7 per cent, respectively, in lunchtime trading.

High-flier The a2 Milk Company, which succumbed to profit-taking in recent sessions, slipped 2.7 per cent.

In the previous US trading session on Tuesday morning, NZ time, the Nasdaq composite index fell 3.8 per cent and the S&P 500 was down 4.1 per cent.

Commentators have reminded local investors that they should focus on the longer term and avoid panicking, saying the economy is still in good shape.

Head of wealth research at Craigs Investment Partners, Mark Lister, said

the NZX was not likely to fall as much as elsewhere, because the interest rate rises that had led to the stockmarket plunges were not a factor here, he said.

‘‘It’s not something impacting the economy; it’s limited to the sharemarket,’’ he told RNZ.

US President Donald Trump, who has taken credit for the US market strength, avoided any mention of the stockmarket during an economic speech on Monday (Tuesday, NZ time) in Ohio, and he ignored the questions reporters shouted at him as he returned to the White House after the markets had closed for the day.