The New Zealand stock exchange has held on to big gains after the US paused hefty tariffs.
Shortly after midday the benchmark top-50 index was up more than 430 points or 3.7%, the biggest one day gain since March 2020.
The strong rally has followed gains of between 8 and 12% on US markets.
Heavyweight stocks with exposure to the US market including Fisher and Paykel Healthcare, logistics company Mainfreight, and dairy company A2 Milk have posted gains of 5 percent or more.
A large number of investment funds based on US assets are also strong performers.
The Australian market is just opening and strong rally there will also support the New Zealand market.
Finance Minister Nicola Willis says she understands the 10% tariff remains and diplomats are working “at pace” to clarify the situation.
“We have channels of communication between officials open”, which was allowing officials between the US and New Zealand to speak with each other and “clarify our position”, she said.
United States President Donald Trump said this morning (NZ time) he would pause many of his new tariffs for 90 days, but raised them further on imports from China.
The sudden reversal came less than 24 hours after steep new tariffs kicked in on imports from dozens of trading partners. China had lashed back with 84% tariffs on US goods from Thursday.
The new trade barriers have hammered markets, raised the odds of recession and prompted retaliatory responses from China and the European Union.
Since Trump’s announcement of tariffs on many countries last week, it has caused “a significant economic event on a global scale”, Nicola Willis told RNZ’s Morning Report programme today.
She said the imposition of the tariffs by the US was “extraordinary”, leading to retaliatory action by others, and “big uncertainty in global markets”, and “ongoing volatility and uncertainty”.
When there was uncertainty it was very damaging to the global economy because traders and investors needed to know what the conditions were to do business, she said.
“And it’s been very hard for anyone to know what that is this week.”
With China being such a major trading partner for New Zealand and now the target of 125% tariffs from the US, there would undoubtedly be repercussions for New Zealand.
“Events that occur there have impact for us and the same for the United States.”
Having China and the US going “tit-for-tat” in a trade war was very destabilising for the world and “a real headwind for New Zealand”.
Asked if New Zealand should separate itself more from the US, Willis praised the approach taken by successive governments which had involved lining up as much trade as possible with other countries.
“That’s the right approach.”
Willis was monitoring the bond market closely and while they had dropped sharply when the tariffs were announced, they had risen a bit in recent days. But it was too soon to know where it was all going to settle to.
