Transtasman sharemarkets quiet after US slump

Transtasman sharemarkets were subdued yesterday, a far cry from expectations of a major sell-off following a three-day slide in United States markets.

Fears the White House's plan to curb bank risk-taking would cut profits contributed to the worst slide in 10 months in the US, along with uncertainty about the Senate's confirmation of Ben Bernanke for another term as the chairman of the Federal Reserve.

Since the Democrats lost their 60-vote hold in the Senate with the election of a Republican in Massachusetts last week, there has been a growing sense among US investors that political uncertainty has all but ended the rally that began in March last year.

For the week ended Saturday New Zealand time, the Dow Jones Industrial Average dropped 4.1%, the S&P 500 lost 3.9% and the technology-rich Nasdaq fell 3.6%.

It was the worst week for the S&P 500 and Nasdaq since October and the worst week for the Dow since March.

Forsyth Barr broker Peter Young said not as much damage occurred in the NZX-50 as predicted.

After consecutive 200-point slides on the Dow, falls of up to 50 points were expected in New Zealand.

However, by mid-afternoon, the NZX-50 was down only five points, he said.

Volume was light but part of that was because it was Wellington Anniversary Day.

Australian markets were down 1%, when they were expected to fall 2%.

"At this stage, we are outperforming US markets and people are finding a few bargains.

"But it all hinges on tonight."

Futures indicated the US markets would open up.

Australia Day today meant those markets would be closed and investors would be sitting on the sidelines, Mr Young said.

With US unemployment at 10% and voters angry at Wall Street, members of Congress facing elections in November have come down hard on the central bank.

The Fed's first interest rate meeting will be held tomorrow and Thursday (NZ time).

The Fed is widely expected to keep rates on hold near zero, although it may sound more optimistic about an economic recovery.

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