Exporters to outperform domestic stocks

Fund managers believe that Australian stocks with international exposure are undergoing a moderate rally that may last until early next year but stocks with a domestic focus will not fare as well.

Companies such as Rio Tinto, BHP, News Corp, Westfield, AMP and Cochlear are expected to benefit from the better-than-expected economic situation in the northern hemisphere while local banks and domestic stocks such as Woolworths are expected to trade in a narrow range until the drought ends. Institutional investors warned however that the rally in internationally-focused stocks may end this month if the US fails to perform up to forecasts or if its government launches an attack on Iraq.