The NZ stock exchange has fallen 2.5 per cent this morning, following a big slump on world markets overnight.
The NZX 50 Index shed 80.89 points to 3297.86, the lowest level in eight months.
The decline in the local market is milder than on the major indexes in Europe and the US, where Standard & Poor's 500 Index tumbled 4.8 per cent and the Dow index dropped to 4.3 per cent – its biggest one day fall since October 2008.
In early trading, NZ Oil & Gas tumbled 5.8 per cent to 65 cents as the price of oil declined, leading decliners on the benchmark index.
Exporters paced the slide with Rakon down 4.3 per cent to 89 cents and Fisher & Paykel Appliances falling 4.2 per cent to 57 cents.
Telecom shed 2.6 per cent to $2.585 and Fletcher Building, the biggest company on the exchange, dropped 2 per cent to $7.85.
New Zealand's benchmark 10-year bond yield tumbled 24 basis points to 4.53 and three-year swaps fell 10 basis points to 2.57 per cent.
"Our market shouldn’t be as affected as what happened overseas," said Alan Moore, who manages $600 million in equities for Milford Asset Management.
"If it did, I don't think it would last long as people would be looking for some big bargains."
ANZ Bank, the country’s biggest lender, fell 4 per cent to $2.10.
Pumpkin Patch, the children’s clothing chain, fell 3.9 per cent to 98 cents. Kathmandu Holdings, the outdoor clothing and equipment retailer, fell 3.5 per cent to $2.20.
Steel & Tube Holdings, the construction material supplier, fell 3.7 per cent to $2.36.
Commenting on the worldwide slump, Milton Ezrati, market strategist at Lord Abbett Co. in Jersey City, New Jersey said: "People are throwing in the towel because they can’t find relief on any front. There are a lot of worries about the economy," .
Underpinning concern about the US government’s monthly payrolls report – one of the most closely watched US economic indicators due tomorrow – was a Labor Department report showing first-time claims for unemployment benefits edged down by a mere 1,000 to 400,000 last week.
"The mood right now is gloomy," Mike Ryan, the New York- based chief investment strategist at UBS Wealth Management Americas, told Bloomberg. His firm oversees US$774 billion. "The burden of proof is for better data that show the economy is not falling into recession.
Across the Atlantic, European Central Bank President Jean-Claude Trichet said that the bank’s bond-buying program was continuing. The central bank also announced it was keeping interest rates steady.
In Japan, the yen tumbled after the government intervened in currency markets to stem recent gains and help the export-led economy. Japan sold one trillion yen, or US$12.5 billion.
Finance Minister Yoshihiko Noda confirmed Tokyo had intervened, saying Japan had acted alone but was communicating with other countries on the move, according to Reuters.
Both the yen and the Swiss franc have been bolstered by their safe-haven appeal. Yesterday, the Swiss National Bank unexpectedly slashed interest rates to lower feverish demand for the Swiss franc.
The Dollar Index, which tracks the greenback against the currencies of six trading partners, climbed 1.4 per cent.
"You can pick your story for why we’re seeing continued pressure. Europe is probably the most prevalent one today, but there’s the whole unfortunate process with the debt ceiling, combined with weak economic numbers here and abroad. That makes for a perfect storm for stocks," Walter Todd, who helps manage US$950 million at Greenwood Capital in Greenwood, South Carolina, told Reuters.
Commodities suffered from the worsening economic outlook, with copper futures posting the largest drop in 10 weeks. Oil plunged 5.6 per cent to US$86.79 a barrel as 21 of 24 commodities tracked by the S&P GSCI Index dropped. Gold retreated from a record too.
There was bad news on the corporate earnings front too.
Gap Inc plunged 12 per cent after sales missed analysts' estimates, while DirecTV dropped more than 6 per cent after failing to attract as many new subscribers as analysts' hoped.
Meanwhile, Kraft Foods CEO Irene Rosenfeld is breaking up the company, which will give investors the opportunity to bet on a snacks business that is growing quickly in emerging markets, or opt for the stable dividends offered by a slower growing general grocery business.
Bilionaire investors Nelson Peltz and Warren Buffett, both influential shareholders, supported the split, CNBC reported, according to Reuters.