ASX drops as energy stocks gain; Altium soars 20pc, Endeavor dips

The T. Rowe Price Asset Allocation Committee moved its rating of Australian equities from “overweight” to “neutral”, noting the continued deterioration of macroeconomic indicators amid growing domestic and global recession risks.

The Australian Asset Allocation Committee said the decision was based on “a weaker earnings outlook for Australia” and “rising recession risks affecting demand for commodities”.

The committee added the product to emerging equities due to improving risk sentiment and supportive monetary policy in China.

T. Rowe Price also moved to “neutral” on value stocks versus growth stocks globally to “moderate the cyclical exposure of our equity allocation amid slowing economic growth,” and maintained an overweight in high yield bonds.

Regarding the decision on Australian shares, Thomas PoullaouecHead of Multi-Asset Solutions APAC said:

“Recent earnings announcements signal downside risks. Commodity prices are falling, while China has yet to provide the support needed to stabilize iron ore prices. higher-than-expected wages could create a more entrenched inflationary problem than expected.

“Given the higher rate of inflation expected going forward, the P/E has room to depreciate further. In addition, looming inflationary concerns mean the RBA is not yet done with its currency cycle. Higher yields are only beginning to hurt indebted consumers with higher mortgage payments.

“The next income season will be key in assessing how well consumers can maintain spending given tighter monetary conditions. We also have signs of a tempered housing market. Pending greater clarity on possible outcomes in the next quarter or so, we will likely maintain our neutral stance unchanged. »

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