Not all ASX stocks stand to benefit equally from the US Fed's first interest rate cut of the year.
As we reported earlier today, overnight, the world's most-watched central bank cut the official federal funds rate by 0.25%. That brings the official US interest rate down to the new range of 4.0% to 4.25%.
But with the Fed's latest easing already baked into the markets, the S&P/ASX 200 Index (ASX: XJO) is following US stock markets and heading lower today. In afternoon trade, the ASX 200 is down 0.6%.
Which brings us to the 'Australian Equity Strategy' report from the team at Macquarie Group Ltd (ASX: MQG).
Particularly, to the ASX stocks the broker believes stand to benefit the most from lower interest rates.
"We think a resumption of Fed cuts will continue to favour stocks over bonds, cyclicals over defensives and growth over value," Macquarie said.
Which ASX stocks could catch interest rate tailwinds?
With interest rates in the US coming down, Macquarie said it's added ASX stocks with tech and AI exposure.
Namely, data centre operator and developer NextDC Ltd (ASX: NXT) and online job advertising company Seek Ltd (ASX: SEK).
Seek shares are bucking the wider selling pressure today, up 0.1% at $28.92 a share.
NextDC shares are up 1.5% at $18.01 a share.
Macquarie also said it's increasing its exposure to ASX growth stocks, "while reducing defensives, bond proxies and US housing, given [the] risk of higher yields".
Macquarie expects that jewellery retailer Lovisa Holdings Ltd (ASX: LOV) and travel company Web Travel Group Ltd (ASX: WEB) both stand to benefit from lower interest rates.
The broker also pointed to a basket of cyclicals with US exposure that it said, "should benefit from renewed Fed cuts and stronger US growth, although partly offset by a weaker USD".
Macquarie said that ASX stocks that could benefit include:
- Payments giant Block Inc (ASX: XYZ)
- Gaming technology company Aristocrat Leisure Ltd (ASX: ALL)
- Gaming development company Light & Wonder Inc (ASX: LNW)
- Electrical appliance manufacturer Breville Group Ltd (ASX: BRG)
- Auto listings company CAR Group Ltd (ASX: CAR)
- Travel company Flight Centre Travel Group Ltd (ASX: FLT)
- And debt collection company Credit Corp Group Ltd (ASX: CCP)
And let's not forget gold.
As gold pays no yields itself, the gold price tends to perform better in low and falling interest rate environments, as do ASX gold stocks.
"Gold stocks have been strong outperformers since the Fed started to ease, and we think that continues," Macquarie said.
The broker believes that both Northern Star Resources Ltd (ASX: NST) and Newmont Corp (ASX: NEM) are well-placed to benefit from lower rates.
