NZ sharemarket stages a comeback after more than a week of losses

The New Zealand sharemarket has closed higher after nine days of falls with companies such as A2 Milk, Spark and Mercury leading the recovery.

The benchmark NZX 50 index rose 1.4 per cent to 8,843 with 28 of the index's stocks gaining, 17 lower and five unchanged. 

The index opened nearly 1 per cent lower as it followed another big fall on Wall Street, but RNZ reported early this afternoon that bargain hunters had emerged and helped turn around the battered local market.

The US President said he thinks "the Fed is making a mistake" with interest rate increases. Source: 1 NEWS

It came after US stocks sank more than two per cent on Thursday, the second day of steep declines around the globe driven by concerns about rising interest rates and trade tensions that could slow economic growth.

The Dow Jones Industrial Average fell 545 points after dropping 831 points on Wednesday. The two-day loss of 5.3 per cent is the biggest for Dow since February. 

The S&P 500 is also down more than five per cent over the two days and after falling for the past six trading days is almost seven per cent below its September 20 high.

The recent turbulence in financial markets is a contrast to what investors have grown accustomed to in a bull market that has lasted more than 10 years, the longest in history. A hallmark of the past decade has been ultra-low interest rates, which the US Federal Reserve used to promote growth in the aftermath of the 2008 financial crisis.

The Fed has been gradually raising interest rates over the past two years, after not having increased them since the recession. Those higher rates have been the catalyst for recent selling, stoking concerns that slower growth would impinge on corporate profits.

The selling on Thursday was widespread. Energy companies sank along with oil prices and CVS lead a rout in health care stocks. Technology companies and retailers, including longtime market favourites Apple, Alphabet and Amazon, extended their recent slide.

"There isn't much of a place to hide right now in the equity market," said Willie Delwiche, an investment strategist at Baird.

Seeking safety, investors bought gold and government bonds. That pushed bond prices up and their yields down, ending a surge in yields that had touched off the market's current decline. But investors found more things to worry about.

There are ongoing concerns about the unresolved trade dispute between the US and China, the world's second-biggest economy.

Strong earnings reports in the coming weeks could soothe investor nerves, but negative comments from company executives about future profits could have the opposite effect. Recently a larger-than-normal number of companies have warned that their third-quarter results could be weaker than analysts expected.

The benchmark S&P 500 index rose in morning trading, but ultimately gave up 57.31 points, or 2.1 per cent, to 2,728.37, its lowest close in three months. The index has declined 6.7 per cent during its current losing streak. That's its steepest downturn since a 10-per cent drop in early February.

The Dow Jones Industrial Average lost 545.91 points, or 2.1 per cent, to 25,052.83 after falling as much as 698. The Nasdaq composite skidded 92.99 points, or 1.3 per cent, to 7,329.06. The Russell 2000 index of smaller-company stocks fell 30.03 points, or 1.9 per cent, to 1,545.38.

Thursday's losses in the US followed steep declines overseas. Markets in France, Britain and Germany fell after stocks declined sharply in Hong Kong and Japan.

The New Zealand Stock Exchange has been reacting to global turbulence after dramatic falls on Wall St. Source: 1 NEWS


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