Wall Street just closed at a record high - will the NZX follow suit?

Wall Street's bull run continous to break records. Photo / Bloomberg

The US sharemarket has closed at a record high, raising the question: will the NZX follow suit?

Wall Street's benchmark S&P 500 index rose 1 per cent to close at its highest ever point of 3431.28 this morning, NZ time.

"The US market is being driven by a bit of rotation out of those 'mega-tech' stocks such as Apple into the broader market - stocks like Boeing and some of the airlines," Salt Funds managing director Matt Goodson said.

There was some optimism in the US on the Covid-19 front after the Financial Times reported that the Trump administration was considering bypassing US regulatory standards to fast-track an experimental vaccine being developed in the UK by Oxford University and AstraZeneca before the November US general election.

By midday, the local market's S&P/NZX50 index was at 11,974 - up 53 points or half per cent from Monday's close.

At that level, the index is just 100 points off its record, set on February 21, of 12,073.34.

The local sharemarket - driven by very low interest rates - rallied by 30 per cent in 2019 and has miraculously recovered from a severe, Covid-driven selloff in March.

"In term of its [the US market's] implications, I think it's going to be more of the same," Goodson said.

"Our market continues to surge to new highs.

"Interest rates are at a record low and investors are being forced up the risk curve into paying higher prices for stocks.

"And there has been a surge in the New Zealand property index in recent days."

Stocks like telco network company Chorus have been well supported because of its relatively secure long-term outlook.

"This current interest rate set-up is favouring a continuation of the TINA trade [there is no alternative] and also the growth-at-any-price trade, because interest rates are so low," Goodson said.

Trading on the NZX starts at 10am.