The advent of three promising vaccines to combat Covid-19 has left investors scratching their heads about what this will mean for sharemarkets, many of which have continued to rally sharply throughout the pandemic.
Governments and central banks have been falling over themselves to cushion the blow caused by the outbreak, and the lockdown measures used to contain it.
With interest rates close to zero, investors have turned to shares as an alternative to fixed interest investments.
Now, investors are looking at what that might mean, if and when the world returns to some semblance of normality - a time when governments turn off the tap and interest rates start to return to more normal levels.
"What we have seen globally - and New Zealand and Australia have not missed out - is a massive shift into cyclical stocks," says Matt Goodson, managing director of Salt Funds.
"Over the last few weeks there has been a very sharp lift in those stocks, whereas for quite some time we have seen a couple of different types of stocks outperform.
Those "different" stocks have been the GAP - "growth at any price" - stocks and the TINA - "there is no alternative" - ones.
"For now the market is in this incredible sweet spot where you have got the Covid vaccine on the horizon and the world opening up, but with still unprecedented levels of central bank easing in New Zealand and globally.
"So you have got this combination of a much better growth outlook thanks to the vaccines and central banks still having a 10-tonne foot on the accelerator."
While they seem low, bond yields are shifting higher - the NZ 10-year bond yield has risen from 0.7 per cent to 0.9 per cent this week.
"That shift goes hand in hand with what is working in the sharemarket and what is not.
"That's one of the reasons why these TINA and GAP stocks have come under a bit of pressure.
"It is still some way off, but investors are now looking at the likely impact on the market of central banks starting to remove the punchbowl."
Fletcher on a roll
For evidence of a return to the cyclical stocks, one need look no further than Fletcher Building, which has seen its share price rally by 42 per cent this month.
In a four-month trading update, Fletcher Building said its earnings before interest and tax, before significant items of $227 million, were up by $80m.
Earnings in New Zealand in the period were up 30 per cent, led by Fletcher's Concrete and Building Products divisions.
Residential and Development earnings were materially higher due to strong house sales, while planned Land Development transactions remain on track for completion in the remainder of 2021.
Chief executive Ross Taylor said customers were pointing to volumes remaining at current levels through to the start of the new calendar year.
However, he added that uncertainty would persist throughout the second half.
F&P in the spotlight
F&P Healthcare's stellar profit performance over the first half understandably put the company under the spotlight, but how will New Zealand's biggest stock by market capitalisation fare in a Covid-free world?
As expected, Covid-driven demand drove its extraordinary 86 per cent lift in net profit, with its respiratory products continuing to be used as frontline therapy.
But Forsyth Barr analyst Chelsea Leadbetter said there was little in the way of new information in the six-month release to help answer the key question: what does the earnings path look like beyond Covid-19?
"It is clear monthly volatility in growth is extreme, demand still strong, while visibility is low on the minutiae of usage," Leadbetter said in a research note.
F&P Healthcare is a high quality growth company, Leadbetter said, but expectations are high.
"We expect growth to be difficult when hospital equipment sales fade from elevated levels, hospitalisations slow and as F&P Healthcare begins to cycle larger numbers from late in the fourth quarter of 2021," she said.
Progress with a vaccine, plus with the likelihood of a low flu season, may also drag, she said.
"We see better value growth stocks in both the New Zealand market and globally," Leadbetter concluded.