The Reserve Bank of Australia (RBA) has given us incredibly low interest rates in 2019.
The central bank slashed rates to further historic lows, down from 1.50% p.a. at the start of the year to just 0.75% p.a. at Christmas.
But what do low-interest rates mean for your ASX shares, and who stands to benefit from the cuts?
Consumer Discretionary shares could cash in
One of the main benefits of low interest rates are lower mortgages. In Australia, the mortgage is often a person’s largest expense. If rates are cut, and these cuts are passed on by the banks, that should mean lower expenses and more money to spend freely.
As we approach Christmas, that could be good news for the ASX retail shares like JB Hi-Fi Limited (ASX: JBH). If consumers have lower repayments, they could splash out a little and by themselves or their families something nice.
January is usually a good test of the Aussie retail sector and also when we see many of the restructurings or bankruptcies take place.
Aussie property shares could be a prime target
Lower rates mean lower financing rates, and that’s good for property prices.
When you combine record low interest rates with record high property prices, property developers are in a great spot.
To that end, I’d keep an eye on is Mirvac Group Ltd (ASX: MGR). Mirvac is heavily invested in residential real estate and has ridden the property boom this year much higher.
The Mirvac share price is up 46.36% this year and the group has outperformed many of its ASX 200 peers.
Keep an eye on ASX Ltd shares
One company that could benefit from low rates is ASX Ltd (ASX: ASX).
The Aussie exchange makes much of its money from initial public offerings through the fees and interest earned on these listings.
Low interest rates spell trouble for fixed income as investors chase yield elsewhere. That could be a good sign for Aussie equities, which could mean more IPOs in the new year.
If that’s the case, keep an eye on the ASX share price as we enter January 2020.
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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.