Sharemarket gains around the world were suddenly wiped at the weekend as investors started to panic about job numbers in the United States and the continuing cash crisis in Greece.
With the NZX closed today because of the Queen's Birthday public holiday, attention will turn to the Australian stock market which is facing a bleak start to the trading week today after the crash in international indices.
In particular, Australian resource companies are expected to feel some investor resistance, especially those in the energy sector, after oil prices sank 3.8% in New York, to the lowest level in eight months.
AAP reported BHP Billiton shares fell 0.8% in New York trading, while Rio Tinto's US-listed shares fell 1.2%.
On Wall Street, the Dow Jones plunged 275 points as traders flocked to the safety of bonds, forcing the yield on benchmark 10-year Treasury notes to a record low. It was the Dow's sharpest one-day fall since November.
The Standard and Poor's 500 index and the Nasdaq both fell more than 3%, while European stock markets again slumped.
London's benchmark FTSE 100 fell 1.1%, France's CAC 40 dropped 2.2% and Germany's Dax plummeted 3.4%.
The London exchange will be closed for public holidays today and tomorrow with futures indices pointing to further weakness once markets reopen.
The trigger for the panic appeared to be the release of the US job numbers with non-farm payrolls rising 69,000 in May, well below consensus.
The unemployment rate rose to 8.2% from 8.1% in April, although the increase reflected people entering the labour force looking for work, seen as a sign of growing confidence.
The data is seen as the clearest evidence yet that the deepening debt crisis in Europe, and a slowdown in China, are starting to dampen an already lacklustre US recovery.
Mesiro Financial chief economist Diane Swonk told Reuters the US was not an island.
"What happens abroad matters here. It is difficult for anyone to commit to hire when growth remains subdued and our fiscal problems both at home and abroad appear to be compounding."
Reading across a wide range of online reports yesterday about major economies provided some worrying results.
Chinese factory outputs barely rose in May and manufacturing activity in Britain had contracted at its fastest pace in the past three years. Earlier reports showed factory activity also fell in Germany and France.
The US Federal Reserve cut overnight interest rates to near zero in late 2008 and bought $US2.3 trillion ($NZ3.1 trillion) in bonds to try to spur a strong recovery. It also said it expected to keep rates "exceptionally low" through at least until late 2014.
Last week, the New Zealand Institute of Economic Research came out with a forecast predicting that the Reserve Bank would hold its official cash rate at the current 2.5% until 2014 - at a time when most other financial institutions are picking the first rise in the OCR in March of next year.
Ongoing further weakness in the global economy, particularly if China's economic growth starts to stall, will put in doubt Finance Minister Bill English's target of a budget surplus of $197 million by 2015.
There is little on the New Zealand business agenda, outside the next Fonterra auction on Wednesday.
Farmers will be anxious to see whether the trend of declining prices looks likely to continue.
At the last auction on May 17, prices of dairy products fell for the third straight sale in Fonterra's GlobalDairyTrade auction, reaching a new three-year low as China's slowdown and euro zone uncertainty weighed on commodities.
The Reserve Bank of Australia (RBA) will issue its cash interest rate decision tomorrow, while key March-quarter gross domestic product data is due on Wednesday.
The RBA's edict on the official cash rate, which currently sits at 3.75% is likely to provide an insight on the state of the nation, which has become increasingly divided economically.
Resource-rich Western Australia continues to boom, thanks to firm commodities prices, but the eastern states have suffered under the weight of the strong Australian dollar.
US Fed chairman Ben Bernanke will testify later this week on Capitol Hill and he is not expected to get an easy ride.
The Fed has been reluctant to act because of the strength of the US equity markets, but after the fall into negative territory for the first time this year, policy-makers are likely to push for more action.
