The good news continued to flow through the Asia-Pacific sharemarkets yesterday as the warm feelings from the European leaders' summit last week gave investors confidence.
All Asian markets were trading up by the time the NZX closed at 5pm as Asia found support on hopes central banks around the world would usher in more quantitative easing to counter weak economic growth.
China shares rose for a third day while the benchmark Hang Seng, in Hong Kong, which reopened after a holiday, was Asia's top performer and hit a seven-week high.
The NZX50 closed last night up nearly 32 points at 3476.78.
Since Friday, the index has risen more than 19% in value.
The United States markets are closed today for the July 4 public holiday but Craigs Investment Partners broker Chris Timms that unless something major came "out of left field" the good run was set to continue until at least tomorrow, when the US markets were again operating.
"The markets are still thriving in the euphoria from the announcement from European leaders.
That goodwill continues to flow through into European and Asian markets."
July was likely to be characterised by a gradual recovery in emerging market risk markets as valuations adjusted from what was seen as broadly oversold conditions, Mr Timms said.
The European Central Bank was expected to cut its main refinancing rate to a record low below 1% at its policy meeting tomorrow.
The Reserve Bank of Australia on Tuesday held its key lending cash rate at 3.5%.
The US markets had a lift late on Friday night while the NZX closed slightly down on anticipation of a failure in Europe, he said.
However, on Monday the NZX was up 40 points, flat on Tuesday and up around 30 points again yesterday.
Fletcher Building, which had been heavily sold down, and Telecom both received benefits from the bounce as investors recognised the good dividend income those companies provided.
"This will continue," Mr Timms said.
Forsyth Barr broker Peter Young said the New Zealand equity market was undervalued by 5% by his measures and he estimated the New Zealand market earnings were still about 12% below trend.
The market median 12-month price/earnings ratio was 12.9 times and the market gross dividend yield was 7.9%.
"With 90-day bank bills at 2.7% and five-year government bonds at 3%, investors are still being well compensated to wait for earnings growth to come through, as the economic recovery strengthens.
"In our view, equity market fundamentals are supportive of positive returns of 15% to 20% over the next year."
