Will Interest Rate Cut help boost the ASX..?

[jaithomson]

Will an Interest Rate Cut help boost the ASX..? What are your thoughts...?

 

[CanOz]

I would think that an interest rate cut would give the markets here a short term boost, then as happened in the US through these recent cuts, the smart money will use these rallies to unload more into the short term strength.

If resources continue to fall, so will the resource based markets.

Another decline in the US dollar may stimulate the ASX though.....coming to an Autumn near you!

Cheers,



CanOz

 

[kyme]

Our interest rates possibly falling is very bad for ASX. After all, interest rates only go down when economy is in trouble therefore a negative to sentiment surely. Aussie dollar exchange rate fallen about 9% already in anticipation of our interest rates possibly falling. Further falls in exchange rate expected. Accordingly we now have overseas investors starting to bail out of ASX particularly resource stocks. That's only to be expected because as our exchange rate falls they loose money on their investment here regardless of ASX performance. Only benefit I see in falling interest rates/exchange rate is that aussie companies producing global commodities eg oil/gas sector will see a sharp rise in their profitability in medium/longer term.

 

[Buster]

Hey Kyme,

Our interest rates possibly falling is very bad for ASX. After all, interest rates only go down when economy is in trouble therefore a negative to sentiment surely..

Ordinarily I'd agree with you here in regards to your view on the economy.. Not so much on the Share Market though..

I personally think that the (expected) interest rate cut(s) that everyone (including myself) seems to be calling are probably nothing more than fine tuning an earlier over reaction by the RBA.. When in doubt, hit hard initially and tweak later if required.

An interest rate cut will be a good for the ASX, companies having debt burdens reduced etc etc, therefore higher profits..

Only benefit I see in falling interest rates/exchange rate is that aussie companies producing global commodities eg oil/gas sector will see a sharp rise in their profitability in medium/longer term.

And that too..

Regards,

Buster