4 Jun 2019

Local sharemarket has worst day in seven months

7:05 pm on 4 June 2019

The local sharemarket has had it single worst day in more than seven months as heightened trade tensions and fears about growth spooked investors.

New Zealand's NZX50 opened down more than two percent in the wake of volatile US trading

New Zealand's NZX50 opened down more than two percent in the wake of volatile US trading Photo: RNZ / Kate Newton

The benchmark NZX-50 index closed down 166 points, about 1.6 percent.

It was the biggest one-day fall since mid-October.

The worst performer was infant formula company A2 Milk, down nearly 11 percent, as the Chinese government said it wants to lift local production, which could eat into A2 sales.

However, many other leading stocks closed lower including Fisher and Paykel Healthcare, Spark, and Sky City.

Tourism-related companies including Auckland International Airport, Air New Zealand, and Tourism Holdings were also weaker, while Fletcher Building dipped after it lowered its forecast for annual earnings.

The escalating trade dispute involving the US and China has raised worries about a slowdown in the world economy, leading investors to seek safety in government bonds.

The New Zealand market has still gained more than 13 percent this year to be one of the best in the world, setting record highs in recent weeks.

Brokers said it was likely some investors have taken the opportunity to cash in on the 14 percent gains.

The benchmark NZX-50 index had fallen more than 150 points in the morning session, with only a handful of stocks managing to post meagre rises.

At times of heightened volatility and nervousness, investors sell risky assets such as shares and look for the safety of government bonds.

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