Fears of an imminent global recession plunged sharemarkets into another tailspin yesterday, despite the United States, European and Asian governments pouring hundreds of billions of dollars into the ailing banking sector during the week.
In the wake of recession statements in the US, the Dow Jones Industrial Average fell 733.08 points, or 7.87%; the S&P 500 plunged 90.18 points, or 9.04%; and the tech Nasdaq Composite lost 150.68 points to end 8.47% down.
New Zealand volatility saw Contact Energy topple Telecom as the largest Top 10 company in terms of market capitalisation at $4.11 billion, compared with Telecom's $4.07 billion.
Telecom's share price, with falls of 7% and 8.6% in the past two days, closed at $2.23 yesterday, below its 1991 list price of $2.28.
Trade in Telecom stocks was heavy at $38 million.
Markets in London, Paris and Germany took up the Dow Jones lead and in volatile trading closed down 6.4%-7.16% overnight, while Asian bourses registered sharp falls ranging from 7% to almost 10% in the case of Japan's Nikkei.
ABN Amro Craigs broker Peter McIntyre described the overseas trading as "bordering on the chaotic", saying the Asian markets were "a sea of red".
Most major markets had made strong, in some cases record double-figure gains, on Monday and Tuesday after eight days of losses, but fears of a pending global recession appear to have taken hold, with investors looking to sell stocks and hoard cash.
New Zealand's SE 50 index initially opened 4% down, tracking down to a 4.8% close on turnover of $99 million, while the Australian All Ords and S&P 200 indexes were down about 7% with less than an hour to close.
Mr McIntyre said Top 10 New Zealand shares were hard hit because they had good liquidity and were easy to sell.
While overseas governments have pumped cash into banks, world recession fears have emerged, and the next catalyst for investor discontent will be the forthcoming US company reporting season and an expected slew of negative reports and economic data.
