With the Reserve Bank of New Zealand (RBNZ) surprising the market and cutting rates by 50 basis points (bps) on Wednesday, the Aussie dollar slumped to a 10-year low and investors were spooked.
But with forecasts pointing to potential cuts from most of the world’s central banks, including our own Reserve Bank of Australia (RBA), is there a silver lining for ASX investors?
Which stocks could benefit from lower rates?
1. Mirvac Group (ASX: MGR)
In my view, Mirvac is one of the top S&P/ASX200 Index (ASX: XJO) stocks that could see greater gains with this low interest rate environment.
Mirvac is heavily invested in residential real estate here in Australia, and lower rates combined with a rebounding property market could be a great mix for Mirvac investors.
I would expect to see lower rates increase borrowing levels for mortgages which should push up property prices, particularly in the capital cities, where Mirvac has significant exposure.
Overall, higher property prices should help Mirvac see a strong return on investment (ROI) from its residential property developments and boost profits for the Aussie real estate group.
2. Afterpay Touch Group Ltd (ASX: APT)
While the Afterpay share price is already shooting the lights out having climbed 88% so far this year, the Aussie payments group could benefit from lower rates here in Australia.
Basic macroeconomic principles would suggest that lower rates should reduce the financial burden on Aussie households, freeing up disposable income to spend on retail.
As a leader in the online and in-store payments space, Afterpay stands to benefit from strong sales across a variety of discretionary spending industries including retail and travel through higher merchant sales and therefore company revenue.
3. ASX Ltd (ASX: ASX)
Not often cited as a top growth stock, the ASX share price could climb higher in the event of further rate cuts, with cheap initial public offering (IPO) financing on offer for pre-IPO prospects.
The ASX generates significant revenue from new listing fees paid by companies looking to list on the Aussie exchange, and with investors turning towards equities given the low-yield environment, we could see a pick-up in IPOs as we head towards December.
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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.