The New Zealand sharemarket fell on opening in what is likely to be the first taste of the bumpy week ahead for global markets after they were surprised by the latest escalation of the US-China trade war.

Photo: RNZ / Rebekah Parsons-King

An hour and a half into trading Monday, the NZX 50 index had fallen more than 1.5 percent.

US markets were rocked at the end of last week by the dramatic escalation of the trade spat, with China announcing additional tariffs on US products, and US President Donald Trump demanding American companies find alternatives to doing business with China.

After markets closed for the weekend, the US upped the ante again with a further 5 percent tariff on some $550 billion of Chinese goods.

Craigs Investment Partners head of private wealth research Mark Lister said the week could be an ugly one.

"It's very hard to predict what will happen because you're talking about politics, something that is difficult speculate on what may or may not happen.

"The worst case scenario is that Trump and China push the world into recession by just letting things out of hand, or they could get around the table realise that trade wars don't do anyone any favours."

But Mr Lister said it was hard to see a resolution coming in the short-term.

"We'll definitely see more volatility, a bit more downside, in the longer term there's every chance sanity prevails."

OANDA senior market analyst Jeffrey Halley told the BBC the uncertainty has investors looking for safe havens.

"We've already seen the yen rallying this morning in early twilight zone trading, gold has opened up a lot higher too, I think there'll be a lot of flow into gold, into Swiss francs and into yen over the course of this day and that's a trend that's going to continue over the course of the week."