Cyclicals: Are rate rises already priced in?

Valuations of interest rate sensitive cyclicals have started falling, so are rate rises already discounted in share prices? L&GI's Richard Penny explores.

Cyclical sensitivity Investors are preoccupied by the prospect of interest rate rises on both sides of the Atlantic, placing stock pickers in a quandary. Housebuilders and construction companies are an interesting case. These stocks are deeply unfashionable right now, but are cheap, and the underlying business performance is generally strong. Rate rises will most likely lead to a dip in demand for property, but at current valuations such a reaction is already more than discounted in the price. But generally it is better to look beyond future rises in interest rates, and we hav...