World sharemarkets continue to rise as investor confidence improves and companies trading globally continue to profit, Craigs Investment Partners broker Chris Timms says.
Robust earnings from heavyweight banks drove European shares to fresh peaks yesterday (NZ time), with Germany's benchmark stock market rising to a record high.
Most investors felt European equities would continue to rise gradually this year, even if there was a near-term pause to the rally, Mr Timms said. Equities offered better returns than bonds, whose returns had been hit by interest cuts by major central banks.
A surge in banking shares also lifted Britain's top share index to a five and a-half year high after Europe's largest lender, HSBC, reported better than expected profits. Of the European financial stocks that had reported quarterly results so far, 63% had beaten analyst expectations.
In the United States, the blue-chip Dow Jones Industrial average closed above 15,000 points for the first time as investor optimism about the US economy bolstered shares such as Caterpillar. Mr Timms said the Dow's landmark close was the latest string of recent stock market records fuelled by heavy liquidity from central banks and some better US economic data.
The rally also found support from the Reserve Bank of Australia's surprise 0.25% cut in its official cash rate to 2.75%.
The NZX gross index continued to strengthen and was now at its highest point since 2007 but Mr Timms said the gross index now included dividends.
Part of the rise in sharemarkets was due to low global interest rates, but there was also a reflection of confidence in the market.
''There is only so long you can be negative.''
Since 2008, global companies, like those in New Zealand, had worked hard to reduce debt, cut costs and adjust sales. Five years later, more companies were able to be nimble when it came to making changes to their operations, he said.
''Just because companies are domiciled in Europe and the United Kingdom, doesn't mean they are affected by the local economy.''
Economic growth had begun to slow in recent weeks, although it remained in positive territory. In the background, central bank support continued and was unlikely to stop in the short term, Mr Timms said.
