The sharemarket fell to a seven-month low as expectations for higher global interest rates pushed up global bond yields and dented demand for equities.
The benchmark S&P/NZX50 Index dropped 0.9 per cent, or 115.209 points, to 12,497.10 on Thursday, its lowest close since June last year.
On Wall Street, the benchmark S&P 500 index fell 1 per cent on Wednesday as investors tried to figure out how fast the Federal Reserve would roll back economic stimulus to cool inflation.
Stocks in the US have slid since Fed officials said in mid-December that plans to wind down bond purchases and other stimulus that are boosting share prices would be accelerated due to the spike in US inflation to a four-decade high.
* Sharemarket drops as investors fret over outlook for higher interest rates
* NZX50 dips despite Wall Street rebound, Ebos charges briefly above $40
* Sharemarket falls as investors await results of Fed meeting amid accelerating inflation
Earlier this week, investors were pricing in a better than 86 per cent probability the Fed would raise short-term rates at its March meeting, according to CME Group. That is up from 47 per cent a month ago.
On Wednesday, US President Joe Biden called on the Fed to do more to fight inflation.
Hobson Wealth Partners investment adviser Brad Gordon said the local bourse had followed the weak lead from the US.
“We are in a bit of a drift mode,” he said. “As soon as interest rates find a level, everything will settle down, but it’s a very macro driven market at the moment because there is no real individual company earnings.”
Gordon said the local sharemarket was already weak ahead of Prime Minister Jacinda Ardern’s announcement on Thursday that all of New Zealand would move into the “red” traffic light system setting in the event of a community outbreak of Omicron.
Ardern said the country would move to the red setting within 24 to 48 hours of discovery of an Omicron case not connected to the border.
Gordon said the announcement would not have come as a major surprise.
The biggest stocks traded by value included Fisher & Paykel Healthcare, which closed unchanged at $30.40. Ebos Group fell 2.2 per cent to $39.10, Spark dropped 0.9 per cent to $4.485, Ryman Healthcare slid 3.7 per cent to $11.08 and Mercury dropped 2.1 per cent to $5.945.
Elsewhere, Asian stock markets rose on Thursday after China cut interest rates to shore up flagging economic growth and Japan reported a double-digit rise in exports.
– With AP