The benchmark NZX50 fell 1 percent in early trading, or 145 points.
Photo: RNZ / Angus Dreaver
The New Zealand share market has extended its losses following latest attacks on Iran by the US and Israel.
The benchmark NZX50 fell more than 1.5 percent in late morning trading, and there were falls across the board.
Companies leading the market down include heavyweights Auckland Airport and Fisher & Paykel Healthcare.
The New Zealand dollar, along with the Australian dollar, was also weaker as investors looked to reduce their global risk exposure.
The Kiwi fell 0.8 percent to be 59.5 cents against the United States dollar, while the Australian dollar fell more than 1 percent against the US dollar in early trade.
Investors tend to sell riskier assets during times of geopolitical volatility, with money diverted to safe haven investments like bonds.
Oil prices have surged. The global benchmark Brent Crude rose 10 percent or US$7 to US$80 per barrel shortly after trading resumed at 12pm (NZT).
Analysts have warned prices could climb as high as US$100.
Iran borders the Strait of Hormuz, which carries 20 percent of the world’s oil and gas supply, and shipments have been suspended following the attacks.
In an early morning note, BNZ senior interest rate strategist Stuart Ritson said financial markets began the week “facing heightened uncertainty”.
“The scale of the attacks, and Iran’s response, has exceeded expectations, pointing to further demand for safe-haven assets and upward pressure on oil prices,” he said.
“With President Trump calling for regime change and signalling the risk of a protracted conflict, the range of potential outcomes has widened, and will likely weigh on risk-sensitive assets.”
Westpac chief economist Kelly Eckhold said the upward pressure on international prices will likely flow through to the petrol pump fairly quickly.
“For every $10 increase in the oil price you might expect about a $7 increase in the cost to produce petrol here, so that’s an idea of the magnitude.”
Eckhold said no one knew when shipping would return to normal, prompting concern about supply, how long it might be constrained and the effect on energy prices.
“A lot of the ships are stopped at the moment while they clarify their insurance arrangements, because they need insurance to go through that part of the Gulf, so there’s probably going to be an increase in insurance costs, if it’s even available to go through there.”
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