1 October we become SureStone CapitalSame team, same ABN. Our website and email addresses move to surestone.com.au.
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Key points
Rising rates and higher oil prices seen as a double hit to Australian consumers Consumer discretionary stocks viewed as vulnerable amid weak sentiment and low growth Select banks such as Macquarie Group (ASX:MQG), Judo Capital (ASX:JDO) and MyState (ASX:MYS) favoured for market share and earnings leverage Gold miners considered attractive on cash flow and valuation despite recent price pullback
Australian banks, gold miners in focus as rates rise and oil surges ,David Lane from Ord Minnett views the latest Reserve Bank decision as a turning point for Australian equities. Lane notes the 5–4 vote to raise rates highlights ongoing concern about inflation, compounded by Brent crude pushing above US$100 a barrel. He expects the Federal Reserve to keep rates on hold given persistent energy-driven inflation. Lane sees mounting pressure on household budgets, with higher mortgage costs and petrol prices effectively acting like “two rate hikes” for consumers.
Lane expects this squeeze to weigh heavily on consumer discretionary stocks, pointing to recent volatility through reporting season and historically weak consumer sentiment readings comparable to the depths of the Covid period. He suggests investors remain cautious towards discretionary names, arguing that slower 1% domestic growth and elevated rates could tilt Australia towards a mild recession risk if energy prices stay high amid Middle East tensions.
On portfolio strategy, Lane favours selected financials and gold miners. He highlights Macquarie Group (ASX:MQG) as offering better value than the major banks, and also points to Judo Capital (ASX:JDO) and MyState (ASX:MYS) as smaller banking exposures gaining market share. Despite recent weakness in the gold price, Lane contends many gold producers continue to generate strong free cash flow and trade on attractive fundamentals.
