A bear market is prevailing over bourses across the world as China's woes deepen - all further undermined by the rout spreading across the oil market.
Crucial to market sentiment and the prevailing sharemarket jitters is today's fourth-quarter gross domestic product (GDP) data out of China, which is expected to move markets if it is below or above the expected 6.9% growth.
Also expected out of China this week is its December data, and year to date, on its industrial production, retail sales and fixed asset investment.
New Zealand's S&P/NZX 50 index sank 1.8% on opening yesterday to its lowest level since mid-December; with 46 stocks falling and only four unchanged.
The NZX 50 is down 4.2% so far this year and the S&P/ASX 200 is down 7.6%.
Oil prices were again down heavily, with the US West Texas Intermediate crude closing the week 11.2% down, finishing below $US30 ($NZ46.60) at $US29.42, Craigs Investment Partners broker Peter McIntyre said.
"It's difficult to see the negative momentum abating in a hurry, with markets still very concerned about looming Chinese currency devaluations, falling oil prices, a weak [US] earnings season and overly aggressive rate hike forecasts from the Federal Reserve'' Mr McIntyre said.
He said the US market was down 10% from December highs, New Zealand -2.4%, Australia -8%, China -20.6%, Europe -14.1% and emerging markets -14%.
"None of these issues are likely to be resolved as early as this week, so expect another volatile week,'' he said.
China's GDP was expected by markets to repeat the previous quarter's 6.9%.
"Given the focus on China at the moment it will be closely watched and will likely move markets should it come in significantly different to this,'' he said.
China's main stock benchmark had entered a bear market; the index having fallen 20% from its recent high; which defined a bear market dragging down stocks, he said.
Traders and analysts had attributed the sharp sell-off to a Chinese state-run media outlet having reported some Chinese banks were no longer accepting shares as collateral for loans.
"The prospect that liquidity could be drying up raised concerns among already nervous investors about the outlook for the market, despite a rebound the previous day,'' Mr McIntyre said.
Westpac chief economist Dominick Stephens said oil prices had fallen to levels not seen in 13 years, and partly related, equity markets around the world had "started the year with a serious case of the jitters''.
"Front and centre are worries about the strength of the Chinese economy.
"A further slowdown in China will, undoubtedly, affect demand for all commodities, not just oil ... that's bad new for New Zealand and other commodity exporters,'' he said.
ASB senior economist Jane Turner said offshore sentiment remained poor last week and equity markets and commodities continued to decline as fears for global growth grew.
"The Chinese economy is at the centre of these concerns,'' she said.
The global economy was increasingly dependent on China to drive economic growth, so the China slowdown was central to global risks during 2016, Ms Turner said.
BNZ economist Craig Ebert said the GDT auction looked "prone for another fall in price''.
The global commodity price backdrop had deteriorated since the last auction, on January 6 and whole-milk powder price futures on the NZX had fallen off "a fraction further''.
"The New Year rains may also be continuing to allay fears of a greater drop in NZ dairy production than is already set to occur for 2015-16,'' Mr Ebert said.
He noted to bear in mind the New Zealand dollar had continued to trend down in strength, which provided a buffer to what would be seen in the GDT price index denominated, in terms of US dollars.
Oil prices plummeted 6% on Friday, bringing their fall since the start of the year to 21%, marking the worst two-week decline since the 2008 financial crisis, on fear of over-supply and softening demand.
Brent crude futures fell more than 3% to below $US28 per barrel in early Monday trade, touching their lowest level since 2003.
Oil prices have been declining sharply since mid-2014 on increased US shale oil production, soft demand growth due to an economic slowdown in China and an end of cheap dollar funding which had fuelled energy investments.
In addition, international sanctions against Iran have been lifted, allowing Teheran to return to an already glutted oil market; prices had already been falling in anticipation of the move. - Additional reporting:Reuters/Businessdesk.
The year so far
Global bourses so far this year, compared with December:
US down 10%.
New Zealand down 2.4%.
Australia down 8%.
China down 20.6%.
Europe down 14.1% .
Emerging markets down 14%.
*Bear and bull markets are defined by a downward/upward movement of market indexes by 15%-20%, over several weeks.
