Why rates get markets down

For those novice investors who wonder why stock markets are preoccupied with moves in interest rates, BCP offers a simple explanation.

According to the stockbrokers and fund managers, rising rates depress markets because:

higher borrowing costs mean reduced company profits;

cash deposits become more attractive and hence monies drift away from equities;

consumer spending moves in the opposite direction to interest rates, falling off as rates rise and consumers' disposable income is reduced.