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UPDATED: NZ shares tumble 2.9% to 11-month low

UPDATED: NZ shares tumble 2.9% to 11-month low after US stock rout

Aug. 9 (BusinessDesk) - New Zealand shares tumbled 2.9% to an 11-month low following a rout in U.S. equities in the first day of American trading after the unprecedented cut to the U.S. credit rating.

The benchmark NZX 50 Index tumbled 92.12 points to 3093.32 in the first half-hour of trading, the lowest level since Sept. 2, 2010, and extending the steepest slide on the local bourse since the collapse of Lehman Brothers in September 2008. Turnover was $37 million.

“Yesterday local markets sold off on the expectation Wall Street would be down around 3%, but last night was much larger than that,” said Grant Williamson, director at Hamilton Hindin Greene. “There’s no relief for investors at this stage – we’ll be watching for Australia’s and Asia’s reaction after midday.”

On Wall Street, the Standard & Poor’s 500 Index slumped 6.7% as investors fled stocks for the safety of bonds’ fixed payments. New Zealand government bonds also rallied, pushing the yield on the benchmark 10-year bond down 7.5 basis points to 4.43%.

Greene said investors were selling down strong-performing stocks as they try to take profits and park their cash in safer investments. Still, he expects bargain hunters to come back to market later on in the session.

Rubber goods manufacturer Skellerup Holdings slumped 9% to $1.11, leading the NZX 50 lower, while jeweler Michael Hill International Ltd. dropped 9% to 98 cents.

Australasian foodmaker Goodman Fielder fell 6.7% to 98 cents. Whiteware manufacturer Fisher & Paykel Appliances shed 6.1% to 54 cents, while tap-maker Methven Ltd. dropped 6.3% to $1.35.

(BusinessDesk)

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