Asia Pacific sharemarkets tumbled yesterday after weak Chinese manufacturing data added to concern about the world's second largest economy.
New Zealand shares suffered their largest fall in almost four years and Australian shares dropped, as losses were felt across the boards from banks to resources.
The NZX50 index fell nearly 2% and the benchmark S&P/ASX 200 and the All Ordinaries indices fell more than 2.4% within the first 20 minutes of trade yesterday.
Banking giants including Commonwealth, Westpac, National Australia Bank and ANZ along with big miners Rio Tinto and BHP Billiton all shed about 2% each.
Mum and dad favourite Telstra also dropped by more than 1%. Chinese stocks fell more than 7% on opening, despite Beijing authorising the state pension fund to invest in stocks to shore up markets.
Tokyo shares dropped 2.1% on opening as most Asian stocks fell to three year lows.
Crude oil and copper prices hit six and a half year lows.
The tumbles came after a torrid session on Wall Street last week when the Dow Jones Industrial Average lost more than 1000 points and the S&P 500 fell below 2000 points for the first time since January 30.
As well as renewed fears about China's economy and a possible exit from the euro zone by Greece, investors were unsettled by US oil prices which on Friday dipped below $US40 ($NZ61) for the first time in six years.
CommSec chief economist Craig James said despite the uncertainty on global markets, the United States and Australian economies remained in good shape.
He also believed worries about Greece and China were overrated.
''At present, we would view the global sharemarket correction as a correction we had to have, a situation that will be beneficial in injecting more value into markets,'' Mr James said.
''There are clearly risks, but the data indicates that US and European economies continue to recover; lower oil prices will serve to boost consumer and business spending; and Chinese authorities are trying a range of measures to maintain momentum in their economy.''
Craigs Investment Partners broker Chris Timms said markets had also moved to price in a much lower chance of the US Federal reserve lifting interest rates next month, although the potential for the first rate rise in nine years remained a focus for many market participants.
The correction was overdue.
''Markets have had a very strong run over recent years and we haven't had a substantial pullback for some time. We are also in a period of the year that is seasonally weak.''
Looking back at US shares over the past 50 years, the period from May to October had yielded an average return of just 0.9%, Mr Timms said.
That was much lower than the average return of 6.5% from November to April. Bad news at this time of the year tended to elicit a sharper market reaction, especially when share prices and valuations were high.
The NZX50 had held up much better than other markets and was likely to continue to do so, he said. The weakest sectors globally had been energy and mining, which were barely represented on the NZX.
Also, New Zealand had much stronger economic growth than most.
''Despite the challenges facing the dairy sector, numerous other industries are in relatively good shape, including those related to non dairy export commodities like the services and tourism sectors.''
Should things get more difficult, New Zealand had more options than other economies, including cutting interest rates further, likely falls in the currency and the ability of the Government to employ greater fiscal stimulus, Mr Timms said.
New Zealand was in the midst of a solid reporting season which should give confidence in both the economic outlook and the health of corporate New Zealand.
Many of the country's largest companies had been reporting strong results over the week.
''It's impossible to predict where we will see markets go from here. There is a plethora of views in the market that range from the current weakness being a buying opportunity already to this being the start of a 2007 08 collapse.''
Craigs was in the middle. Mr Timms believed more weakness was likely to come and a correction of 10% to 15% - on average from peak to trough - seemed likely.
