Australian (ASX) Stock Market Forum

Finance vs. Commodities

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alter1217

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Hmm, the past few weeks we've all seen finance stocks like NAB, ANZ, etc, jump to new highs.... and resource stocks like BSL, OST, RIO, and BHP lag and slowed down.

I'm wondering, is this all because of approaching rising interest rates which will lift the Australian dollar, reducing export earnings?

Whereas, with higher interest rates, foreign investors would change their cash into Australian dollars and put them in Australian banks to take advantage of the rates, benefiting the finance sector because of the inflow of capital.

Is my speculation anything to do with my observation? Or is there something else behind it explaining the phenomenon?
 
IMO it's got nothing to do with any imminent interest rate hike, although I can understand the link you're making between bank interest and international capital investment.

Although there's a link between industries in the market I believe the trends you're talking about are more independent.

The commodities were what started this rally based on speculation that China was going to pull us up and out by way of our mining sector. I personally think that the miners were over bought. And when a sector is over bought and no further optimistic news is coming out it will pull back as a general correction. I'd say providing there's no unexpected news in the coming months they'll stabilize then begin the upward trend again.

The financials on the otherhand I think are increasing based on the perceptive link people make between the market rallying and bank profit. End of the day, people see shares as profit in the financial industry, regardless of the industry driving a rally. So if the market is going up then the obvious conclusion is that the financials are making more and more profit. When this rally finally stops I think we'll see a significant pull back in the financials, relative to most other industries.
 
Heavy duty argumentation for a resurgence of commodities. I didn't really listen but these guys have depth and make an historical case. Gold stocks never been cheaper (my comment: only the right ones). Energy, base metals and uranium.

 
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