Stock Takes: Volatility now the new norm

While the roller-coaster ride on sharemarkets around the world may have made headlines and created a frenzy of attention, experts suggest this could be just the start of a return to more normal volatility levels.

John Carran, a senior economist at Kiwi Wealth, says historically volatility has been the norm for sharemarkets.

"What has been unusual over the last two years has been very low volatility.

"What we have now is a return to the type of volatility we have seen prior to the global financial crisis and before central banks started pumping money into the financial system."

Carran believes volatility is likely to be a theme in the markets this year as share valuations hit all time highs making them more sensitive to bad news. Companies who surprise on the down-side or even fail to meet expectations on profits could see their share prices hammered.

But Carran says the global market is likely to be more affected than the New Zealand sharemarket where companies are typically more defensive.

New Zealand's sharemarket has been an attractive place for overseas investors with its high dividend paying companies, but with interest rates set to rise that could see less money coming here.

"Those markets more sensitive to interest rate rises will suffer more, in that sense the New Zealand market is a little more vulnerable," Carran says.

But despite the market turbulence economic fundamentals remained strong with most economies around the world expecting to grow this year.