The New Zealand sharemarket fell to a three year low just before noon, following another bloodbath on Wall Street.
The NZX-50 was down 2.7 percent at 2968 just before noon, its lowest point since 2005.
It has since made a small recovery, to be down 73 points for the day.
The Australian sharemarket has been hit as well, opening more than 3% lower.
But Forsyth Barr broker Peter Young said it was not as bad as it could have been.
"In the scheme of things, Australia and New Zealand are holding up well, given what is happening in all other markets around the world.
"There is some buying starting to come back into the market.''
Asian markets were likely to open down for the day but there were some positive signs for late trading with the Dow Jones futures market moving back into positive territory, he said.
Japan's Nikkei index was likely to follow the lead of the Dow Jones and fall below 10,000 points this afternoon.
The New Zealand dollar was "all over the place'' as the turmoil continued in the global inancial markets, Mr Young said.
It had recovered against the Australian dollar to trade around A88c and had risen to US65c.
In Australia, the benchmark S&P/ASX200 was down 138.4 points, or 3.05%, to 4402, while the broader All Ordinaries had fallen 141.9 points points, or 3.12%, to 4402.8.
On the Sydney Futures Exchange, the December share price index futures contract had lost 127 points to 4439, on volume of 11,568 contracts.
In New Zealand, the NZX-50 had made a small recovery to be down only 73 points for the day.
"We had two down days I would not be surprised to see a bit of a bounce at the end of trading as people start to realise there are some bargains out there.''
US stocks ended sharply lower, with the Dow finishing below 10,000 for the first time in four years, on concerns that fallout from the escalating credit crisis will drag the global economy into recession and cripple profits.
