Macquarie sees Trump policies causing bear market
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The news: Macquarie analysts have warned there's a risk of a bear market in Australian equities as trade wars and spending cuts driven by the Trump administration expose risks of a "material slowing" in US real consumer spending.
The context: The analysts said they remain defensive on Australian equities, reducing exposure to last year's "momentum winners" while adding some more "contrarian ideas".
They noted that the technology, discretionary, media and banking sectors benefited most from "fear of missing out" investments and are likely to be most negatively impacted by the expected downturn.
Healthcare remains Macquarie's top overweight category, adding Ramsay Health Care, lifting CSL and reducing ResMed.
Staples is its second preferred sector, shifting some weighting from Coles to Woolworths.
Materials is upgraded to Macquarie's third top sector, as a potential beneficiary from China. Gold is its preferred segment, with Newmont its top stock pick, as it switches from Pilbara Minerals to lithium rival IGO, and adds larger BHP exposure.
Macquarie increased its underweight rating on banks, removing Commonwealth Bank in favour of ANZ and a small increase in National Australia Bank.
In real estate, Macquarie has shifted preference from Charter Hall Group to GPT Group, and reduced Goodman Group.
Elsewhere, Macquarie added IDP Education and Block, while reducing a number of "momentum winners", including Coles, IAG, Aristocrat Leisure, Xero, ALS and Light & Wonder.
The source: Macquarie research
