September’s RBA rate hike saw investors favour Macquarie and BHP shares. Here’s what to expect in October: expert

The Reserve Bank of Australia (RBA) will disclose its next interest rate decision tomorrow, 6 September.

Fast rising rates, and the prospect of more ahead, have already wrought major changes amongst ASX shareholdings.

Growth shares, priced with future earnings in mind, have largely fallen out of favour.

Meanwhile, blue-chip commodity producers, like BHP Group Ltd (ASX: BHP) shares, and select financial shares have garnered more investor interest.

RBA rate hike likely to spur conservative investments

In August, the RBA lifted rates by another 0.50%. The central bank’s fourth consecutive monthly increase brought the official cash rate to the current 1.85%, up from the rock bottom 0.10% earlier in 2022.

Analysts widely expect another 0.50% rate hike to be announced tomorrow, bringing the cash rate to 2.35%.

And, according to data compiled by online trading platform Stake, that could be seeing investors favour Macquarie Group Ltd (ASX: MQG) and BHP shares, while lightening their holdings of ASX buy now, pay later (BNPL) stocks like Sezzle Inc (ASX: SZL) and Zip Co Ltd (ASX: ZIP).

Russell Katz, markets analyst at Stake told The Motley Fool:

We analysed the ASX trading activity on Stake before and after last month’s 50bps increase, and saw that prior to the RBA’s announcement, investors had already begun trending away from growth stocks such as Zip and Sezzle, towards stalwarts such as BHP shares and Macquarie.

Katz noted that trading volume on the Stake platform dropped temporarily immediately after last month’s RBA announcement.

“But those that did invest played conservatively,” he said, “primarily moving to commodity producers, the Big Four (excluding NAB) and broad-based ETFs.”

He added that the lower trade volumes likely meant many investors had “already settled their positions before the news landed”.

As for Tuesday’s RBA rate decision, Katz said:

Most commentators predict another 50bps increase on Tuesday, so it’s likely that the trend towards broad-based ETFs and blue-chip stocks will continue. Given current sentiment, and a move towards dollar-cost averaging, it’s possible that most investors will have settled their positions in advance of Tuesday’s rates decision.

Indeed, according to data from CommSec, the volume of BHP shares traded last Wednesday was the highest since 18 March, with Thursday and Friday trading also well above average levels.

How have BHP shares been performing?

BHP shares have come under some pressure this year amid sliding iron ore prices.

Year-to-date, the BHP share price is down 11%. That compares to a 10% loss posted by the S&P/ASX 200 Index (ASX: XJO) in 2022.

The post September’s RBA rate hike saw investors favour Macquarie and BHP shares. Here’s what to expect in October: expert appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ZIPCOLTD FPO. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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