The Dow Jones Industrial Average slid 2.1% to 41,911.71. Major tech names saw sharp losses, with Tesla shares diving 15.4%.

Matt Goodson, managing director at Salt Funds, said tariff-driven trouble overseas had made for a “tricky” day on the local market.

Most Asian markets were weaker but were off their lows towards the end of the session.

“It’s just an ongoing response to the US soap opera played out in front of us,” he said.

“Tariffs themselves are stagflationary – lower economic output and higher inflation – and that is very negative for equity markets,” Goodson said.

“There appears to be a credible threat around material tariffs and for the other countries that are impacted.”

For investors, there weren’t many places left to hide.

The US benchmark 10-year Treasury – seen as a safe haven – has declined in yield from its recent 4.8% peak to 4.18%. In bonds, yields fall when prices rise.

“I think a flight to safety reaction [in Treasuries] is not something that will last because at the end of the day, the policies you’re seen out of the US do mean higher inflation, which normally means higher rather than lower interest rates,” Goodson said.

“So it’s a tricky situation for investors right now and there’s the threat of recession as Trump mentioned over the weekend.”

In the local market, there were losses across the board.

Fisher and Paykel Healthcare edged back by 8c to $34.95 after Monday’s big gain, while its US-Australian competitor, ResMed rallied sharply on the ASX.

The advent of weight loss drugs has tended to knock the respiratory products companies around as weight problems are often linked to breathing issues.

Danish drug firm Novo Nordisk had earlier revealed weaker-than-expected data from a second late-stage trial of its obesity drug candidate CagriSema, which sent its shares lower.

Specialised utilities software firm Gentrack dropped 50c or 4.5% to $10.55 in sympathy with tech weakness abroad.

Goodson said Gentrack tended to be swayed by momentum-type investors, although he noted volume in the stock was light.

Infrastructure investor Infratil dropped 29c or 2.7% to $10.29 following on from weakness in the data centre segment overseas.

Infratil has a holding in Canberra Data Centers (CDC).

“Even though it [Infratil] is a low-risk play, it still gets caught up in the sell-off,” he said.

Qantas shares fell sharply in Australia on the ASX after Delta Airlines in the US slashed its first-quarter revenue and earnings outlooks.

Air New Zealand was also caught in Delta’s downdraft a little, but ended the day unchanged at 62c.

Fonterra’s units gained 2c to $5.47 after Monday’s earnings upgrade.

The co-op has embarked on a dual-track process to sell its consumer business.

Market commentators say a trade sale is more likely than an initial public offer.

“Fonterra is in a real sweet spot at the moment,” Goodson said.

“It’s not often you have both very strong milk prices and very good ingredient margins,” he said.

“Getting those two together is a real boon for the country and something that probably hasn’t received enough attention.”

Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.