Global sharemarkets yesterday fed off the misery created by Wall Street when United States shares plunged to their lowest level in five and a-half years.
US investors took fright at gloomy economic news as automative company executives predicted a calamity without a government lifeline.
Prospects for a Congressional bail-out of the US auto industry faded further yesterday with little expectation that Democratic leaders would support a compromise in the works, with little time left for action.
The last-ditch effort to extend $US25 billion ($NZ46.2 billion) in aid to General Motors Corp, Ford Motor Company and Chrysler LLC hinged on negotiations that are supported by Republicans and the "lame-duck" White House.
General Motors shares fell to their lowest level in 66 years and Ford hit a 26-year low.
But the pain was spread well beyond the automative sector.
Forsyth Barr broker Peter Young said he was looking at a sea of red when contacted late yesterday afternoon.
Only Telecom shares were trading in positive territory for the day after the whole market was "trashed" as investors bailed out.
However, the bail-out was on small volume and could have been day traders who were just in and out rather than deciding to stay long-term, he said.
"The market sentiment is selling. People have no confidence and when the Dow does its thing there are a few panic sellers. There has just been downgrade after downgrade of company earnings. Companies are struggling out there."
Japanese stocks hit a three-week low yesterday and Hong Kong opened down 5.1%.
Late in the day, the Federal Reserve slashed its economic growth forecasts for next year, helping unleash a wave of selling that continued into the closing sessions.
In the US financial sector, Bank of America, JP Morgan Chase and Citigroup all fell to multi-year lows on persistent worries about the fallout that the worsening credit and contract-ing economy will have on banks.
The Fed cut its funds rate to 1% from 1.5% at its scheduled meeting last month, part of an aggressive rate-cutting campaign that has taken the benchmark rate for overnight bank loans down 3.25% since the beginning of the year.
The New Zealand Reserve Bank is expected to cut its official cash rate by 1% to 6.5% on December 4.
