Last week the RBA hiked rates for the first time in 12 years, raising the cash rate from an all-time low of 0.1% to 0.35%. Several more rate hikes are likely in the next 12 months.
Currently, we believe that RBA rate hikes will not be a significant headwind for equities. However, a rate hike environment would likely result in prolonged volatility until the market gets more clarity about the end game.
Rate hikes will benefit certain sectors and not others:
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David is one of Australia’s leading investment strategists.