Banks outperform on hopes that higher rates will support balance sheets
The market is caught in a two way pull, with banking shares moving higher but commodity companies on the slide.
It is the prospect of a US rate rise next month, as suggested by the minutes of the last Federal Reserve meeting released on Wednesday, which is responsible for both trends. Banks are buoyed by the idea that higher rates will bring some relief to their balance sheets, but mining companies are being hit by the prospect that a dearer dollar will push down commodity prices and also possibly curb economic growth.
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