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NZX falls following US interest rate cut

The local sharemarket has shrugged off fears about the coronavirus after a surprise interest rate cut in the United States spooked investors and sent shares sliding.

Photo: Supplied / NZX

The Federal Reserve lowered its benchmark rate by 50 basis points to a range of 1 percent to 1.25 percent.

The benchmark top 50 Index opened about 0.75 percent lower, but this afternoon it has turned positive and posted a second positive session in a row.

It has closed up 71 points or nearly 0.33 percent higher.

The index had posted its first rise in a week yesterday, gaining more than 2 percent.

Read more about the Covid-19 coronavirus:

Air New Zealand was one of the bigger losers after it confirmed that the second case of the Covid-19 virus in this country had travelled from Singapore on one of its flights and then taken two domestic flights.

Overnight, US markets fell close to 3 percent after the surprise rate cut by the Federal Reserve failed to calm investor nerves.

The Federal Reserve's move mirrors that of the Australian Reserve Bank which cut its interest rate from 0.75 percent to a record low 0.5 percent on Tuesday.

Markets around Asia, with the exception of Australia, are flat or marginally higher.

Wall Street's main indices - the Dow Jones, S&P 500 and Nasdaq - each fell close to 3 percent.

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Local financial markets are now convinced the Reserve Bank of New Zealand will follow other central banks and cut its benchmark interest rate at its next review in three weeks.

On Monday, ANZ chief economist Sharon Zollner said she expects the Reserve Bank of New Zealand to cut the Official Cash Rate by 50 basis points to 0.5 percent at the end of March to help the local economy.

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