Thursday 16th October 2008
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The NZX 50 fell 119.575, or 4.1%, to 2785.067 in early trading. The index has declined in nine of the past 10 trading sessions. Telecom Corp., the biggest stock on the bourse, slid 6.6% to a new 16-year low NZ$2.28 after yesterday cutting its profit forecast because of spending on its high-speed mobile network.
Australian banks that trade on the NZX were among the biggest decliners. ANZ Bank fell 8.7% to NZ$18.75 and Westpac Banking dropped 7.2% to NZ$23.90.
U.S. stocks had their biggest slump since the 1987 crash after figures showed retail sales fell, stoking concern the world's biggest economy is sinking into recession and that government efforts to bail out the financial system won't be enough to arrest the slide. The Standard & Poor's 500 Index tumbled 9% to 907.84 and the Dow Jones Industrial Average slid 7.9% to 8577.91. The NASDAQ Composite fell 8.5%.
Federal Reserve Chairman Ben Bernanke said investors shouldn't expect an immediate recovery in the U.S. economy and "economic activity will fall short of potential for a time."
"The squeeze is really going to come through now on the profit story," said Craig Ebert, senior markets economist at Bank of New Zealand. "The profit cycle has been incredibly strong - now we're moving into a period where it's going to be tougher."
Nuplex Industries fell 6.9% to NZ$5.40 on the prospects of waning demand for the resins and chemicals it makes for use in paints, printing ink and adhesives. Food manufacturer Goodman Fielder Ltd. fell 8% to NZ$1.58. Carpet maker Cavalier declined 5% to NZ$2.47.
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