Source: Radio New Zealand
NZX sign RNZ / Angus Dreaver
New Zealand and Asian share markets have tumbled as concerns mount about over the war in the Middle East and its impact on the world economy.
The benchmark NZX 50 fell 3 percent in mid-Monday afternoon trading, while across the Tasman, the ASX 200 fell 4 percent.
In Japan, the Nikkei plunged 6 percent.
It comes as global oil prices surge amid supply concerns, with travel through the vital Strait of Hormuz at a halt.
The benchmark Brent Crude rose to its highest level since 2022, as prices surged past US$100 a barrel, to settle at around $108.
Forsyth Barr investment adviser Mark Fowler said investors were nervous.
“I think the markets are starting to really speculate about how protracted this conflict is going to be in the Middle East,” he said. “And we’ve seen this enormous surge in oil prices.”
Fowler said there was potential for a global economic shock as prices flow through.
“Markets are starting to realise the reality of that sort of inflationary pressure,” he said.
“Everyone thought that this would be a short-term shock, but if it’s more medium-term, what are the wider ramifications for global markets? And you’re really starting to see concerns around that now.”
Kiwibank economists said “things are likely to get worse before they get better”.
“We’re bracing for much higher volatility, with a bigger market reaction in the near term,” they said.
“Our hope [is] that markets rebound quickly once the dust settles, as they did in 2022 following the Russia and Ukraine crisis period.”
Kiwibank said with disruptions to oil, gas and shipping, an immediate lift in inflation was “all but a done deal”.
“But the downside risks to global and domestic growth cannot be ignored either,” they said. “And ultimately, under this kind of supply shock induced inflation, it’s the damage to demand that is likely to dominate.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
