Investors sought out safe-haven investments of gold and
government bonds yesterday as a pair of geopolitical events
rattled financial markets.
A day after the Dow Jones Industrial Average hit its 15th
high for the year, stocks fell sharply after reports flooded
in about a Malaysia Airlines passenger being shot down.
Later, Israel announced it had begun a ground invasion of the
Gaza Strip, hastening the slide in sharemarkets around the
Asia stocks opened lower and the sell-off continued
throughout the day.
In New Zealand and Australia, defensive stocks, such as
resource companies with an exposure to gold, banks and oil
companies, saw their shares rise in value.
Shares in Macraes Mine operator Oceana Gold rose 9% on the
day and Newcrest mining shares rose 6%.
Air New Zealand joined other airlines around the world in
seeing its share price fall, as Malaysia Airline shares
tumbled nearly 19%. Delta Airlines shares fell 3.4%, American
Airlines shares were down 4.1% and United Continental was
Craigs Investment Partners broker Peter McIntyre said
investors sold shares in a move to avoid risk and poured
money into safe-haven investments and bonds.
''The Standard & Poor's 500 dropped like a rock.
''I can't remember a time when there were more geopolitical
skirmishes going on, all of which are creating uncertainty.
We were already ripe for a correction.''
The CBOE Volatility Index, an options-based measure of future
signs in the S&P 500 widely known as the ''fear gauge'',
surged 32%, its largest one-day rise of the year.
With the New Zealand market closed for the weekend, investors
would take their lead on Monday from how the United States
and Europe traded today, he said. Also on the horizon were
tougher sanctions being issued against Russia by the US and
the European Union saying it would detail new sanctions
against Russia by the end of the month.
Oil prices also jumped. Investors were worried the downing of
the jet in the Ukraine could become a potential flashpoint
that presented another threat to global crude supplies.