If you've been wondering whether to keep piling into Wall Street or lean into local opportunities with ASX shares, then it could be worth listening to the thoughts of Bell Potter.
In a note out today, the broker makes a timely case for Australia-first.
Its view is that the biggest near-term risks are centred on the United States, while Australian equities look relatively insulated and backed by more flexible policy settings.
Why tilt to ASX shares now
Bell Potter argues the key catalysts for a U.S. share market correction—tariffs and a sharper U.S. growth slowdown—are largely domestic to America.
By contrast, Australia's economy and market composition leave ASX shares less exposed to those specific shocks, and the Reserve Bank of Australia (RBA) retains more room to manoeuvre than a still inflation-constrained U.S. Federal Reserve. The broker said:
While a US-led correction would have global repercussions, we believe the primary drivers, tariffs and a sharp US slowdown, are predominantly US-centric. We therefore continue to tactically prefer Australian equities, which appear relatively insulated from these specific issues and benefit from the RBA's greater policy flexibility compared to a more inflation-constrained US Federal Reserve.
Essentially, if the U.S. stumbles, the aftershocks won't necessarily hit Australia as hard—and the RBA has more policy wriggle room to cushion any bumps.
Quality first
Inside global equities, Bell Potter keeps stressing that quality is the place to be as growth slows and margins compress.
That means ASX shares with strong balance sheets, high returns on equity, and stable earnings—businesses that can protect profitability, pass through costs, and keep compounding through a softer backdrop. It explains:
Within global equities, we continue to favour quality. In an environment of slowing growth and margin pressure, companies with strong balance sheets, high returns on equity, and stable earnings are better positioned to weather economic uncertainty.
These businesses typically have more pricing power to pass on inflationary costs and are less reliant on favourable economic cycles for growth, offering a key defensive characteristic.
This might mean shares like ResMed Inc. (ASX: RMD), CSL Ltd (ASX: CSL), or Coles Group Ltd (ASX: COL).
Don't forget the hedge
Bell Potter also highlights a role for gold as portfolio insurance. When growth wobbles and inflation risks linger, gold has historically helped diversify equity risk and dampen drawdowns. That becomes more relevant if the U.S. faces stagflation-like data or policy uncertainty. It concludes:
For broader portfolio hedging, we also see a role for gold in portfolios. Gold typically performs well during periods of economic uncertainty and rising inflation, acting as a reliable store of value when confidence in fiat currencies wanes. Given the near-term risks to growth and the potential for market volatility, gold can serve as an effective portfolio diversifier and a hedge against the stagflationary data we anticipate in the coming months.
