Company Interview / Ten Cap's turning to tech stocks

Key Points:

Middle East tensions have so far not resulted in lasting oil infrastructure damageTodd suggests energy and precious metals as safe havens, with travel stocks under pressureRBA rate action could be necessary if energy-driven inflation persistsLife360 (ASX:360) and Zip (ASX:ZIP) highlighted as tech stocks with potential

Heightened geopolitical uncertainty in the Middle East has dominated recent market narratives, but Jason Todd from Ten Cap suggests that while energy prices are under scrutiny, the absence of lasting damage to oil infrastructure means markets may adapt to ongoing risks. Todd highlights that despite anxious headlines, current market reactions—such as the MSCI being down only 1% from its peak and the ASX falling just 50 points—signal a relatively measured backdrop for investors. In addition, both the Nasdaq and S&P 500 have recorded gains, illustrating continued investor willingness to buy on dips, though Todd cautions that this approach requires genuine pullbacks first.

Todd holds that a surge in energy prices could feed into inflation, potentially prompting the Reserve Bank of Australia to act. He argues that the RBA should not delay addressing inflationary pressures, which have been evident even before the current conflict, given solid GDP growth and a tight labour market. Todd points to energy and precious metals as hedges for those more concerned about geopolitical risks, while noting that shorting the travel sector is a common response in this climate.

On the technology front, Todd notes recent resilience in software and tech names, mentioning stocks such as Life360 (ASX:360) and Zip (ASX:ZIP), which have both faced pressure but possess robust business models. Todd views the recent reporting season as one of the best in years, revealing broadening profit growth across sectors, especially in financials, global cyclicals, and materials.