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Jamie Gray is a business reporter for the NZ Herald

Why markets are loving Trump

New Zealand share prices have firmed but have seriously lagged Wall Street's Dow Jones Industrial Average, which closed at record high.

The US share market continued to rally on the back of a win for Donald Trump in US presidential election, the Dow ending 218.19 points, or 1.2 per cent higher at 18,807.88 after hitting an all-time high of 18,873.66 earlier in the session. The broader S&P 500 index was just 1 per cent off its record.

By late morning, the local NZX-50 index was up by 32 points at 6766 but was still about 11 per cent down since the record high set in September.

"When compare us with the US our market is still lagging in a big way," said Mark Lister, head of private wealth research at Craigs Investment Partners.

"That's a pretty serious gap in performance," he said. "We have not seen the resurgence in our market at all," he said.

Analysts said likely reason for the gap is the high proportion of yield-sensitive stocks in the local market starting to look less attractive.

The world's debt markets have kicked back into life. With US 10 year yields hitting 2.15 per cent - their highest point in more than 10 months, the allure of yield-sensitive New Zealand stocks has diminished.

In the US, banks and health-care shares surged on bets that a Trump administration would roll back regulatory scrutiny of the industries.

Industrial shares rallied on Republican plans to boost infrastructure spending, Bloomberg reported.

Technology shares plummeted, with losses mushrooming in the biggest names. Utility and real-estate stocks tumbled as a rout in bonds pushed the 10-year yield higher, dampening demand for the shares' relatively high dividend payouts.

Trump's promise to revive American infrastructure means commodities used to build everything from airports to bridges will benefit under his presidency, according to Goldman Sachs.

"Yields are moving their way higher, that's good for banks," said Art Hogan, chief market strategist and director of research for Wunderlich Securities in Boston told Bloomberg.

- NZ Herald

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