Interest rates move markets because they change the cost of money. When borrowing gets cheaper, companies can finance growth more easily and consumers spend more. When borrowing gets expensive, growth cools. Understanding this basic dynamic helps explain why Online Trading Platform so quickly to rate headlines and policy signals.
When rates rise, valuation multiples tend to compress. Higher discount rates reduce the present value of future cash flows, which is why growth and tech names—often priced on long-dated earnings—see sharper swings. For example, during recent rate hike cycles, price-to-earnings ratios in high-growth segments fell faster than those in defensive sectors. Conversely, when rate expectations ease, those same sectors often lead rebounds as investors re-rate future earnings.
No comments:
Post a Comment