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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 world.
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 down 3.5%.
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.