12 Jun 2020

NZ sharemarket drops 3 percent at opening on Friday

10:34 am on 12 June 2020

The New Zealand sharemarket has opened sharply lower this morning following the overnight slide on Wall Street.

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Photo: 123RF

The benchmark top 50 index is down more than 410 points or about 3.7 percent in early trading, the biggest fall since mid-March.

Every company in the NZX Top 50 is down in price with Air New Zealand, retailer Kathmandu, and Fletcher Building posting some of the bigger drops.

The market started the week with a 3 percent gain and had clawed back most of the losses of the past three months.

However, brokers have been warning the market was looking overheated and was due for a correction.

The drop mirrored markets in the US with Wall Street plummeting overnight as investors reacted to renewed fears of a pandemic resurgence and digested dour economic forecasts from the US Federal Reserve.

All three major US stock indexes lost well over 5 percent, posting their worst one-day percentage drops since 16 March, when markets were sent into freefall by the abrupt economic lockdowns put in place to contain the pandemic. The Nasdaq snapped a three-day streak of record closing highs.

The sell-off was broad, with all 11 major sectors of the S&P 500 falling from nearly 4 percent to well over 9 percent.

"There's really no buy point," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. "It's pretty much selling all the way through."

Tim Ghriskey, chief investment strategist at Inverness Counsel in New York, agreed.

"Everything's for sale," Ghriskey added. "There's fear we're near a top."