How Sensitive Are Stocks To Interest Rates? Time to Find Out
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    HOUSE MEDIAN ASKING PRICES AND WEEKLY CHANGE     Sydney $1,617,056 (+0.24%)       Melbourne $1,000,525 (-0.63%)       Brisbane $1,042,046 (-0.57%)       Adelaide $935,729 (-0.10%)       Perth $926,969 (+0.05%)       Hobart $747,180 (-1.31%)       Darwin $765,724 (+2.11%)       Canberra $969,015 (+0.41%)       National $1,064,466 (+0.02%)                UNIT MEDIAN ASKING PRICES AND WEEKLY CHANGE     Sydney $762,768 (+0.19%)       Melbourne $477,217 (+0.91%)       Brisbane $655,017 (-0.25%)       Adelaide $503,220 (+0.13%)       Perth $506,109 (-0.69%)       Hobart $538,123 (+0.07%)       Darwin $392,695 (+2.21%)       Canberra $507,202 (+0.63%)       National $563,984 (+0.16%)                HOUSES FOR SALE AND WEEKLY CHANGE     Sydney 11,236 (+860)       Melbourne 14,447 (+809)       Brisbane 7,855 (+165)       Adelaide 2,564 (+97)       Perth 7,208 (+167)       Hobart 1,205 (+31)       Darwin 179 (+1)       Canberra 1,172 (+79)       National 45,866 (+2,209)                UNITS FOR SALE AND WEEKLY CHANGE     Sydney 8,798 (+348)       Melbourne 6,789 (+167)       Brisbane 1,627 (+44)       Adelaide 378 (-3)       Perth 1,628 (+21)       Hobart 230 (+2)       Darwin 257 (-2)       Canberra 1,162 (+42)       National 20,869 (+619)                HOUSE MEDIAN ASKING RENTS AND WEEKLY CHANGE     Sydney $800 ($0)       Melbourne $590 (-$5)       Brisbane $650 ($0)       Adelaide $620 ($0)       Perth $700 ($0)       Hobart $570 ($0)       Darwin $760 (+$10)       Canberra $700 (+$5)       National $682 (+$2)                UNIT MEDIAN ASKING RENTS AND WEEKLY CHANGE     Sydney $750 ($0)       Melbourne $600 ($0)       Brisbane $650 ($0)       Adelaide $500 ($0)       Perth $650 ($0)       Hobart $450 ($0)       Darwin $580 (-$3)       Canberra $580 ($0)       National $608 (-$)                HOUSES FOR RENT AND WEEKLY CHANGE     Sydney 6,578 (-8)       Melbourne 8,259 (-152)       Brisbane 4,220 (-209)       Adelaide 1,555 (-25)       Perth 2,249 (-66)       Hobart 200 (-5)       Darwin 136 (-8)       Canberra 600 (-30)       National 23,797 (-503)                UNITS FOR RENT AND WEEKLY CHANGE     Sydney 10,121 (-465)       Melbourne 7,272 (-299)       Brisbane 2,271 (-100)       Adelaide 433 (+6)       Perth 693 (-24)       Hobart 84 (+1)       Darwin 193 (-22)       Canberra 582 (-14)       National 21,649 (-917)                HOUSE ANNUAL GROSS YIELDS AND TREND         Sydney 2.57% (↓)       Melbourne 3.07% (↓)     Brisbane 3.24% (↑)      Adelaide 3.45% (↑)        Perth 3.93% (↓)     Hobart 3.97% (↑)        Darwin 5.16% (↓)     Canberra 3.76% (↑)      National 3.33% (↑)             UNIT ANNUAL GROSS YIELDS AND TREND         Sydney 5.11% (↓)       Melbourne 6.54% (↓)     Brisbane 5.16% (↑)        Adelaide 5.17% (↓)     Perth 6.68% (↑)        Hobart 4.35% (↓)       Darwin 7.68% (↓)       Canberra 5.95% (↓)       National 5.60% (↓)            HOUSE RENTAL VACANCY RATES AND TREND       Sydney 2.0% (↑)      Melbourne 1.9% (↑)      Brisbane 1.4% (↑)      Adelaide 1.3% (↑)      Perth 1.2% (↑)      Hobart 1.0% (↑)      Darwin 1.6% (↑)      Canberra 2.7% (↑)      National 1.7% (↑)             UNIT RENTAL VACANCY RATES AND TREND       Sydney 2.4% (↑)      Melbourne 3.8% (↑)      Brisbane 2.0% (↑)      Adelaide 1.1% (↑)      Perth 0.9% (↑)      Hobart 1.4% (↑)      Darwin 2.8% (↑)      Canberra 2.9% (↑)      National 2.2% (↑)             AVERAGE DAYS TO SELL HOUSES AND TREND         Sydney 37.5 (↓)       Melbourne 40.0 (↓)       Brisbane 38.2 (↓)       Adelaide 33.4 (↓)     Perth 45.9 (↑)        Hobart 39.4 (↓)       Darwin 42.4 (↓)       Canberra 40.6 (↓)       National 39.7 (↓)            AVERAGE DAYS TO SELL UNITS AND TREND         Sydney 35.0 (↓)       Melbourne 40.2 (↓)       Brisbane 34.4 (↓)       Adelaide 32.0 (↓)     Perth 46.6 (↑)        Hobart 39.6 (↓)     Darwin 49.6 (↑)      Canberra 49.0 (↑)        National 40.8 (↓)           
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How Sensitive Are Stocks To Interest Rates? Time to Find Out

As central banks start lifting borrowing costs from near zero, profitless startups are certain to suffer.

By Jon Sindreu
Mon, Mar 21, 2022 10:25amGrey Clock 3 min

There is a new urgency to the old question of how much credit falling interest rates should get for your stock portfolio’s strong performance.

The Federal Reserve and Bank of England have raised borrowing costs over the past week, confirming the end of near-zero rates and, analysts fear, of a decadeslong boost to stock valuations.

Higher share prices relative to company earnings explain half the returns of the S&P 500 over 10 years. That proportion rises to 60% for the technology-heavy Nasdaq as Google parent Alphabet Inc., Meta Platforms Inc. and Amazon.com have left “old economy” banks and utilities in the dust.

The raft of profitless tech-focused startups that hit the market last year, such as electric-vehicle maker Rivian Automotive Inc., fintech lender SoFi Technologies Inc. and various air-taxi ventures, seem particularly exposed to the turning tables. Otherwise, though, investors need to do some homework before simply rotating back to old-economy sectors.

A bond with a 2% coupon becomes less attractive when the return investors get by leaving the money in the bank rises from 0% to 1%. And its resale value will fall a lot more if it matures in 10 years rather than in two, because investors are locked in for a decade of disappointing returns. In financial jargon, it has higher “duration,” which is both a measure of sensitivity to rates and the weighted average time until all the cash flows are paid.

What about stocks? While they offer much more legroom to speculate because payments aren’t fixed, their value is—usually—still tied to expectations of making a profit. Mature businesses with predictable dividend payments can be seen as having low duration, whereas growth-led firms have more of their value tied to earnings in the distant future. Startups have extra-long duration: They are akin to buying a lottery ticket with a payout in 10 years’ time.

Most stocks, however, fall somewhere in between, which requires going beyond intuition or sector correlations with bond yields.

In a 2004 paper, University of Michigan researchers Patricia M. Dechow, Richard G. Sloan and Mark T. Soliman popularised a way to estimate a company’s “implied equity duration” by predicting future cash flows based on the growth of sales, earnings and book value. Applying their math to S&P 500, Euro Stoxx 50 and FTSE 100 stocks puts the duration of blue-chip stocks at around 20 years. As expected, the consumer services, healthcare and tech sectors, which have done better in the period of rock-bottom borrowing costs, rank above average, while energy, finance and telecommunications are below.

Sector averages are misleading, however. Within tech, the implied duration of Amazon and Netflix is above 23 years, whereas International Business Machines Corp. and Intel Corp. are closer to the market average and Hewlett-Packard Enterprise Co., a maker of laptops and printers, ranks near the bottom at less than 14 years.

Meanwhile, electric-vehicle maker Tesla Inc. is an example of a long-duration disrupter in a mature industry. Cable operator Charter Communications Inc. and clothing giants Inditex, Burberry and Under Armour Inc. are less-obvious cases of old-economy but high-duration stocks.

Investors need to be careful with distortions created by the pandemic, which sunk the short-term profits of some more traditional sectors. As a 2021 paper shows, the crisis lengthened their implied duration by tying more of their value to post-Covid earnings, making casinos and cruise companies look more growth-focused than they are.

Markets still predict that the Fed will keep rates below 3% this economic cycle, compared with more than 5% pre-2008. So this past decade’s trend may only be partially reversed, especially because much of the valuation premium fetched by the likes of Amazon and Alphabet reflects the growing dominance of these firms in the real world. Conversely, banks may make more money when rates are higher, but the main reason they have suffered in recent years is weak economic growth and stricter financial regulation.

This is the moment for investors to take a closer look at the duration of their individual stockholdings. But they shouldn’t forget that strong balance sheets and growing profits win the day, no matter where interest rates are.

Reprinted by permission of The Wall Street Journal, Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: March 20, 2022.



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Tech Giants Double Down on Their Massive AI Spending

Amazon, Google, Microsoft and Meta pour billions into artificial intelligence, undeterred by DeepSeek’s rise

By NATE RATTNER AND JASON DEAN
Fri, Feb 7, 2025 3 min

Tech giants projected tens of billions of dollars in increased investment this year and sent a stark message about their plans for AI: We’re just getting started.

The four biggest spenders on the data centers that power artificial-intelligence systems all said in recent days that they would jack up investments further in 2025 after record outlays last year. Microsoft , Google and Meta Platforms have projected combined capital expenditures of at least $215 billion for their current fiscal years, an annual increase of more than 45%.

Amazon.com didn’t provide a full-year estimate but indicated on Thursday that total capex across its businesses is on course to grow to more than $100 billion, and said most of the increase will be for AI.

Their comments in recent quarterly earnings reports showed the AI arms race is still gaining momentum despite investor anxiety over the impact of China’s DeepSeek and whether these big U.S. companies will sufficiently profit from their unprecedented spending spree.

Investors have been especially shaken that DeepSeek replicated much of the capability of leading American AI systems despite spending less money and using fewer and less-powerful chips, according to its Chinese developer. Leaders of the U.S. companies were unbowed , touting advances in their own technology and arguing that lower costs will make AI more affordable and grow the demand for their cloud computing services, which AI needs to operate.

“We think virtually every application that we know of today is going to be reinvented with AI inside of it,” Amazon Chief Executive Andy Jassy said on Thursday’s earnings call.

Here is a breakdown of each company’s plans:

Amazon said a measure of its capex that includes leased equipment rose to a record of about $26 billion in the final quarter of 2024 , driven by spending in its cloud-computing division on equipment for data centers that host AI applications. Executives projected it would maintain the fourth-quarter spending volume in 2025, meaning an annual total of more than $100 billion by that measure.

The company—which gets most of its revenue from e-commerce and most of its profit from cloud computing—also projected overall sales for the current quarter that missed analysts’ expectations. Its shares slid about 4% in after-hours trading Thursday. The stock rose more than 40% in 2024 and was up nearly 9% this year before its earnings report.

Jassy said AI has the potential to propel historic change and that Amazon wants to be a leader of that progress.

“AI represents for sure the biggest opportunity since cloud and probably the biggest technology shift and opportunity in business since the internet,” Jassy said.

Google shares are down about 7% since its earnings report Tuesday, which showed disappointing growth in its cloud-computing business. Still, parent-company Alphabet said it is accelerating investments in AI data centers as part of a surge in capital expenditures this year to about $75 billion, from $52.5 billion in 2024. The spending will go to infrastructure both for Google’s own use and for cloud-computing clients.

“I think part of the reason we are so excited about the AI opportunity is we know we can drive extraordinary use cases because the cost of actually using it is going to keep coming down,” said CEO Sundar Pichai .

AI is “as big as it comes, and that’s why you’re seeing us invest to meet that moment,” he said.

Microsoft has said it plans to spend $80 billion on AI data centers in the fiscal year ending in June, and that spending would grow further next year , albeit at a slower pace.

Chief Executive Satya Nadella said AI will become much more extensively used , which he said is good news. “As AI becomes more efficient and accessible, we will see exponentially more demand,” Nadella said.

Growth for Microsoft’s cloud-computing business in the latest quarter also disappointed investors, leaving its stock down about 6% since its earnings report last week.

Meta, too, outlined a sizable increase in its investments driven by AI, including $60 billion to $65 billion in planned capital expenditures this year, roughly 70% higher than analysts had projected. Shares in Meta are up about 5% since its earnings report last week.

CEO Mark Zuckerberg said investing vast sums will enable it to adjust the technology as AI advances.

“That’s generally an advantage that we’re now going to be able to provide a higher quality of service than others who don’t necessarily have the business model to support it on a sustainable basis,” he said.

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11 ACRES ROAD, KELLYVILLE, NSW

This stylish family home combines a classic palette and finishes with a flexible floorplan

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Just 55 minutes from Sydney, make this your creative getaway located in the majestic Hawkesbury region.

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