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

Is this why the conglomerate’s stock is outperforming?

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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.

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