Why Macquarie just dumped Qantas shares from its model portfolio

It’s been a bouncy day for the Qantas Airways Limited (ASX: QAN) share price this Tuesday. After a strong start this morning, which saw Qantas shares rise as high as $5.92, the airline has trended lower throughout the day. The Qantas share price is now going for $5.885, up 0.26% for the day thus far.

Perhaps investors got a case of the old cold feet over Qantas shares, considering what brokers at Macquarie have just come out and said about the company.

As an ASX broker, Macquarie runs a series of what are called model portfolios. These are portfolios that help and inspire clients to construct portfolios of their own.

According to reporting in The Australian today, Macquarie has just kicked Qantas out of its model portfolios.

Qantas shares depart from ASX broker’s model portfolio

Why? Here’s what the report said was behind the decision:

Forecasting a US recession next year, the investment bank’s strategy team has swung to backing defensive stocks, arguing risks are too high for a range of stocks that did well from the first phase of the rate rises this year.

So Qantas is among the stocks that don’t make this cut — according to Macquarie anyway. Other losers receiving the boot include Australia and New Zealand Banking Group Ltd (ASX: ANZ), Tabcorp Holdings Ltd (ASX: TAH), and Qantas’ fellow ASX travel share Flight Centre Travel Group Ltd (ASX: FLT).

Instead, Macquarie is turning to ‘defensive’ ASX shares in light of its perceived risk of a US recession. Some of the ASX shares that Macquarie is keeping in its model portfolios include Commonwealth Bank of Australia (ASX: CBA), Transurban Group (ASX: TCL), and APA Group (ASX: APA).

If there indeed is a recession in the United States next year, it could well have a negative effect on Qantas. Travel is most certainly a discretionary spending item, not a staple one. If the Australian economy, for example, experiences tough times, travel is one of the first things a family or a business will probably look to trim out of the budget.

Not what Qantas shareholders would want to hear right now, one would guess. The Qantas share price remains up more than 14% year to date in 2022 thus far. Earlier this month, Qantas shares hit a new post-COVID high of $6.17 a share.

The post Why Macquarie just dumped Qantas shares from its model portfolio appeared first on The Motley Fool Australia.

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More reading

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• Why this fund manager sees tailwinds ahead for the Qantas share price
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• Buy these ASX 200 shares now before the market wakes up: fund manager
• Why did the Qantas share price face headwinds today?

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended APA Group. The Motley Fool Australia has recommended Flight Centre Travel Group Limited and Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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