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Australian traders are reaching for the pantry staples. With gold sliding towards US$4,000, iron ore largely stuck, and an RBA meeting looming, Week 24 has delivered a “textbook defensive rotation” – and HotCopper Wire hosts Isaac McIntyre and Jonathon Davidson reckon supermarkets are the winners.
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“There’s been interesting trends in Week 24, with standout stocks like Coles and Woolworths, among other staple stocks, all enjoying really green weeks, even as the rest of the bourse dumps hard,” McIntyre said on Thursday.
“I can only imagine Aussie traders are getting sick of opening their portfolios and seeing global headlines have, yet again, sent everything sagging red.”
The question HotCopper‘s editor posed on the podcast this week: Coles (ASX:COL), Woolworths (ASX:WOW), Endeavour (ASX:EDV), and A2 Milk (ASX:A2M) are all benefiting. Is it time to batten down the hatches for the next little while?
“I do, and I think that’s what we’ve seen everybody decide,” Davidson said. “I was looking at Coles stock, up nearly 8% week-on-week, basically all of its year-to-date gains, and it’s climbed again this morning as we face another red day.”
The logic runs a little wider than just groceries, he added: “No matter what happens in macro, people still need to buy essentials and pick-me-ups,” Davidson said. “Treasury Wine Estates, up on Wednesday, presumably there’s a perceived need there for people to have a drink. I think that’s probably a solid bet.”
And JD’s warning: “Any investors not in defensive stocks already, living a normal life, not watching the hour-by-hour finance news headlines, probably caught out here. More pain for commodities… more pain broadly.”
The “big winner” is Woolworths, he suggested, “up nearly 30% year-to-date… outperforming the discretionary sector by over 15%.” But zoom out: “On June 9 three years ago, Woolworths was around $37.50, and that’s around where it is now,” Davidson said.
“Long-term, it’s actually Coles which has been the better growth. I’d say Coles’ land banking is probably giving them a leg up.”
And why now? “It looks like this Iran war thing is finally landing on Wall Street’s radar, and that’s making American investors wonder more.”
You can listen to the full HotCopper Wire episode below.
You can also find the POD to listen to and download over on Spotify.
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Disclaimer, as spoken by Isaac McIntyre in the HotCopper Wire episode: Any information or advice in this HotCopper podcast recording is intended for education and entertainment purposes. Any advice is general in nature and does not take into consideration your objectives, financial situation or needs. Before acting on general advice, you should consider whether it is relevant to your needs and read the relevant Product Disclosure Statement. And if you are unsure, please speak to a financial professional.
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