Why is the Wesfarmers share price beating the ASX 200 this week?

Is this why the conglomerate's stock is outperforming?

| More on:
A young woman sits on her lounge looking pleasantly surprised at what she's seeing on her laptop screen as she reads about the South32 share price

Image source Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The Wesfarmers share price is outperforming the ASX 200 so far this week, posting a fall of just 0.8% while the index is down 2.24% 
  • The company's home sector – the ASX 200 consumer discretionary – is also doing better than the broader market 
  • Additionally, the company is one flagged by experts as a potential winner during times of higher inflation and interest rates 

The Wesfarmers Ltd (ASX: WES) share price is dodging much of the broader market's downturn this week despite no news having been released by the company.

The S&P/ASX 200 Index (ASX: XJO) is recording a fall of 2.24% for the week so far as of Wednesday afternoon. The index is down 0.11% today.

Meanwhile, the Wesfarmers share price is trading at $49.16, 0.49% higher than its previous close and just 0.8% lower than where it ended last week.

So, what has protected the ASX 200 giant from the worst of the market's recent woes? Let's take a look.

Why is Wesfarmers outperforming this week?

The Wesfarmers share price is outperforming this week alongside the company's home sector.

The retail conglomerate, which also has interests in fertilisers, chemicals, energy, and even lithium, is at home on the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ).

The sector has fallen just 1.5% for the week so far. Meaning, the company's sector is also besting the broader market.

This week's downturn appears to be an extension of the slide born from concerns about rising interest rates.

The Reserve Bank of Australia hiked rates for the first time in 11 years last week after Australia's inflation rate surpassed 5%.

Fortunately, Wesfarmers is among the stocks experts predict could perform well even in a high interest rate environment.

They believe companies with strong balance sheets and low debt profiles are the way to go when rates rise.

And Sequoia Wealth Management advisor Peter Day recently told The Motley Fool Australia's Tony Yoo that Wesfarmers' balance sheet is looking strong.

One of the company's headline retail brands Bunnings is particularly likely to continue attracting customers despite the uncertain interest rate environment.

Wesfarmers share price snapshot

While it's outperforming this week, the Wesfarmers share price has been struggling this year so far.

It has tumbled 18% since the start of 2022 while the ASX 200 has slipped just 7%.

It is also 10% lower than it was this time last year. In that time, the broader market has slipped just 0.7%.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Consumer Staples & Discretionary Shares

A couple of friends at a rooftop party enjoying some hot and tasty Domino's pizza
Dividend Investing

Own Domino's shares? Today is pay day!

Eligible Domino’s shareholders can expect some welcome passive income today.

Read more »

Woman looks amazed and shocked as she looks at her laptop.
Consumer Staples & Discretionary Shares

If you'd put $20,000 in this ASX retail stock at the start of 2023, you'd have $134,000 now

This online retailer has executed a remarkable turnaround for its investors.

Read more »

Photo of two women shopping.
Earnings Results

Premier Investments share price jumps 9% on results and demerger plans

The Smiggle and Peter Alexander owner has released its results. How did it perform?

Read more »

a woman with lots of shopping bags looks upwards towards the sky as if she is pondering something.
Consumer Staples & Discretionary Shares

How a potential demerger could deliver a 10% upside for this ASX 200 stock

Investors might have even more reasons to love this ASX 200 stock if rumours are true.

Read more »

A smiling woman sits in a cafe reading a story on her phone about Rio Tinto and drinking a coffee with a laptop open in front of her.
Consumer Staples & Discretionary Shares

Why Goldman Sachs expects market-beating returns from Super Retail shares

Goldman Sachs thinks this retail share could offer big returns for investors.

Read more »

A happy boy with his dad dabs like a hero while his father checks his phone.
52-Week Highs

Why is the A2 Milk share price up 46% year to date and at a 52-week high?

This infant formula company's shares have delivered the goods this year.

Read more »

Happy man on a supermarket trolley full of groceries with a woman standing beside him.
Consumer Staples & Discretionary Shares

2 things I'm waiting for before buying Coles shares

I'm waiting for two things before I add Coles to my share portfolio.

Read more »

Hand holding Australian dollar (AUD) bills, symbolising ex dividend day. Passive income.
Consumer Staples & Discretionary Shares

If I'd put $5,000 in Wesfarmers shares at the start of 2024, here's what I'd have now

Are investors smiling this year? Let's see how its shares have performed.

Read more »