28 May 2013

Share market falls as global investors draw back

9:52 am on 28 May 2013

The share market fell more than 1% on Monday in a drop analysts said was largely due to global investors drawing back from the New Zealand market.

The benchmark NZX 50 Index has dropped more than 3% since peaking at a record on 14 May.

Until the recent dip, it had gained more than 35% in the previous 12 months.

An adviser at Bancorp Treasury Services, Peter Cavanaugh, says the same sentiment is driving the sharemarket as has been pushing the New Zealand dollar lower against the US dollar in recent days - a stronger US currency and a rush out of riskier assets.

Mr Cavanaugh says the New Zealand dollar is seen as having slightly increased risk because of New Zealand's trade ties to a slowing Chinese economy, and to Australia where there has been an interest rate cut and motor industry closures.

He says the currency may now be consolidating. It was virtually unchanged overnight on Monday and by 7am on Tuesday was trading at US80.84 cents.