Shares of Commonwealth Bank of Australia (ASX: CBA) have surged 1.2% this morning to record a fresh all-time high at $87.28. While the bank stock endured a rough patch between September and October last year, it has still managed to rise 18.8% over the last 12 months, heavily outperforming the benchmark S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) in that time.
Here are three reasons the stock may be rising today…
- The iron ore price fell heavily overnight, acting as a heavy weight on the mining sector. As a result, investors may be seeking the 'security' offered by some of Australia's largest stocks including Commonwealth Bank. Telstra Corporation Ltd (ASX: TLS) and Woolworths Limited (ASX: WOW) have also risen 1.1% and 1.5% respectively.
- The Reserve Bank of Australia is tipped to cut interest rates even further, possibly as soon as next week. Investors may be positioning their portfolios accordingly by stocking up on high-yielding shares. Commonwealth Bank is tipped to yield 4.8% in the 2015 financial year, fully franked.
- It's also possible that a further drop in interest rates could spur the big four banks' profits even higher this financial year. Lower interest rates would decrease the chances of a rebound in bad debt charges in the near-future while loan growth could also improve.
While Commonwealth Bank of Australia could climb higher in the near-term, there are far greater opportunities on the ASX right now worth considering.