Stock markets around the world took a hammering yesterday, losing billions of dollars in value of between 2% and 3% in general from bourses across the United States, Australia, Asia and early trading in Europe.
Several factors compounded to spook investors yesterday, including unexpected data revealing more Americans applying for unemployment, and also global fears associated with the extent of sovereign debt being carried by several countries, including Greece, Spain and Portugal.
By comparison, New Zealand's stock exchange, near the close of trading yesterday, was down 1.65%, on light turnover of almost $50 million, with some tops stocks hit hard.
Telecom was down 4%, Auckland International Airport 1% and Contact Energy 0.5%.
According the Sydney Morning Herald, about $30 billion was wiped off the value of the Australian stock market in a matter of minutes yesterday morning, after key indicators around the world took a dive overnight - largely following overnight declines in the United States.
The Dow Jones Industrial Average tumbled 2.61% to 10,002.26, after a brief dip below 10,000 for the first time since November, the tech-heavy Nasdaq composite dropped a hefty 2.99% and broad-market Standard & Poors 500 index lost 3.11% In the Asia-Pacific region, while still trading late yesterday, the Singapore Straits Times bourse was down 2.06%, the South Korea Kospi 3.07 %, the China Shanghai Composite 1.78%, Japan's Nikkei 2.83% and Hong Kong's Hang Seng 2.91 %.
Craigs Investment Partners broker Peter McIntyre said the global sharemarket gains of around 60% since the slump in March last year "had got ahead of themselves" and yesterday's retractions were not so much negative, but a healthy sign of a true market correction.
"We could see a fall by as much as 20% before there is stabilisation.
"The world's problems can't be solved in 11 months," he said of governments' underpinning economies by printing money.
He said government stimulus packages were being funded by government debt issuance.
Investors were wondering where this would end and, as an example, the Portuguese Government debt issuance of $500 million this week gained only $300 million in subscriptions.
Reuters reported European shares fell 2.8% to a two-month closing low on Thursday.
Concerns about about the global economy pushed Britain's top share index, the FTSE, to its lowest close in three months as spiking risk aversion hammered banks and miners, while energy stocks fell on weaker commodity prices.
The FTSE 100 ended down 2.2%, its lowest close since November 5, having snapped a three-session winning streak on Wednesday.
Banks were the biggest drag on the index.
Heavyweight HSBC, Royal Bank of Scotland, Barclays and Lloyds Banking Group were between 3.7% and 7.8% lower.
