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\nPhoto: RNZ \/ Angus Dreaver\n<\/p>\n
New Zealand and Asian share markets have tumbled as concerns mount over the war in the Middle East and its impact on the world economy.<\/p>\n
The New Zealand share market just had its worst session since April last year.<\/p>\n
The NZX 50 dropped 3.1 percent or 421 points, with across-the-board falls in shares, including heavyweights Auckland Airport and Fisher & Paykel Healthcare.<\/p>\n
Air New Zealand shares also fell nearly 8 percent, with the airline likely to be a victim of higher jet fuel prices.<\/p>\n
In Australia, the ASX 200 has fallen 3.3 percent, while in Japan, the Nikkei plunged 7 percent.<\/p>\n
It comes as global oil prices surge amid supply concerns, with travel through the vital Strait of Hormuz at a halt.<\/p>\n
The benchmark Brent Crude rose 25 percent or US$23 to US$116 a barrel, its highest level since 2022, on concerns about global supply.<\/p>\n
Forsyth Barr investment adviser Mark Fowler said investors were nervous.<\/p>\n
“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.”<\/p>\n
Fowler said there was potential for a global economic shock as prices flow through.<\/p>\n
“Markets are starting to realise the reality of that sort of inflationary pressure,” he said.<\/p>\n
“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.”<\/p>\n
Kiwibank economists said “things are likely to get worse before they get better”.<\/p>\n
“We’re bracing for much higher volatility, with a bigger market reaction in the near term,” they said.<\/p>\n
“Our hope [is] that markets rebound quickly once the dust settles, as they did in 2022 following the Russia and Ukraine crisis period.”<\/p>\n
Kiwibank said with disruptions to oil, gas and shipping, an immediate lift in inflation was “all but a done deal”.<\/p>\n
“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.”<\/p>\n