Rate rises can be positive for stocks

us market

The prospect of a higher cost of borrowing is presenting opportunities for investors prepared to look at fundamentals and ignore market noise that downgrades the good stocks along with the bad

The market dynamics of the past year have begun to turn in recent weeks. Logically enough, in parallel with the pick-up in the broad US economy, it was cyclical stocks that led the market rally of 2003. More recently, however, concerns have surfaced about valuations, and more specifically about the ability of cyclical companies to continue to report increased earnings at the same rate as in the past year. In other words, some investors have become worried that valuations are based on current expectations that might not be realised. While concerns such as these may be valid to some exten...