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The IGO Ltd (ASX: IGO) is enduring a tough end to the week, along with many other ASX mining shares.

The diversified miner’s shares are currently down 6.93% to $9.26 despite no news out of the company.

In broad market moves, the S&P/ASX 300 Metals and Mining Index (ASX: XMM) is down 3.06% to 4,745 points in late afternoon trading.

What’s up with the IGO share price?

The IGO share price and many of its peers are struggling today as the mining sector reacts poorly to Rio Tinto Limited (ASX: RIO)’s downgrade to alumina production today.

Not only that, economists are lowering their forecasts for key industrial metals including aluminium, zinc, and nickel.

Industrial metals have fallen across the board as the US dollar continues to strengthen against all major currency pairs.

Copper fell to trade at US$7,261 on the London Metals Exchange (LME) yesterday after falling to a near two-year low of US$7,160 a day earlier.

ANZ commodity strategist Daniel Hynes said the demand picture out of China “is improving” while prices are falling, suggesting that investors are pricing in lower economic growth.

All of this has weighed on the mining sector and appears to have transposed to the IGO share price.

Meanwhile, 83% of analysts still rate IGO as a buy right now, per Refinitiv Eikon data, with 16% saying it’s a sell.

The consensus price target from this list is $12.75 per share, suggesting there’s still upside to capture.

In the last 12 months, the IGO share price has clipped a 7% gain.

The post IGO share price declines 7% amid commodity fears appeared first on The Motley Fool Australia.

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More reading

• 3 ASX lithium shares that flew in FY22, and 1 that sank
• ASX 200 mining shares glide lower as expert reduces commodity targets
• ASX battery metals shares trying to power up after a horror June
• Here’s why the IGO share price is discovering a 5% rally on Friday
• Is now the time to be buying beaten down ASX 200 mining shares?

Motley Fool contributor Zach Bristow 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 no position in any of the stocks mentioned. 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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It has been another busy week for Australia’s top brokers. This has led to the release of a large number of broker notes.

Three broker buy ratings that you might want to know more about are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

Bapcor Ltd (ASX: BAP)

According to a note out of Citi, its analysts have retained their buy rating and $8.03 price target on this auto parts retailer’s shares. The broker continues to rate Bapcor as its top pick in the sector and expects the company to continue to benefit from the lack of supply of new vehicles for longer than previously thought. The Bapcor share price is trading at $6.40 on Friday afternoon.

Megaport Ltd (ASX: MP1)

A note out of Macquarie reveals that its analysts have retained their outperform rating but cut their price target on this network as a service provider’s shares to $16.00. While Macquarie has trimmed its price target to reflect rising rates, it remains very positive and sees major upside potential for its shares. In addition, it suspects that the market is being too conservative with revenue estimates ahead of its quarterly update this month. The Megaport share price is fetching $6.80 today.

Pilbara Minerals Ltd (ASX: PLS)

Another note out of Macquarie reveals that its analysts have their outperform rating and $4.20 price target on this lithium miner’s shares. This follows the release of the results from the company’s latest BMX lithium auction. Macquarie was impressed with the price that the company commanded and notes that it is materially higher than its estimates for FY 2023. The Pilbara Minerals share price is trading at $2.38 this afternoon.

The post Brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Thursday
• Why Data#3, Netwealth, New Hope, and Pilbara Minerals shares are pushing higher
• The best and worst ASX All Ords mining shares of FY22
• Pilbara Minerals share price drops on latest BMX lithium auction update
• 3 ASX lithium shares that flew in FY22, and 1 that sank

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended MEGAPORT FPO. The Motley Fool Australia has recommended Bapcor and MEGAPORT FPO. 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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The Carsales.Com Ltd (ASX: CAR) share price is down 3.83% to trade at $18.59 in late afternoon trading.

The broader market is also down today with the benchmark S&P/ASX 200 Index (ASX: XJO) losing 0.7%.

One expert believes a new acquisition is going to do great things for the online classifieds company.

Is the Carsales share price a buy?

WAM Active Limited (ASX: WAA) is a listed investment company run by Wilson Asset Management. It invests in “market mispricing opportunities in the Australian market”.

For background, the Carsales share price is down more than 25% year to date.

In its June 2022 investor update released yesterday, the fund manager said it was positive about Carsales exercising its call option to acquire the remaining 51% of United States marketplace business, Trader Interactive.

Carsales operates the largest online classifieds business in Australia for cars, motorcycles and boats. It’s also a part-owner of Trader Interactive, which has a leading position in the categories of recreational vehicles (RVs), powersports, and commercial trucks and equipment.

Carsales earnings ‘more resilient’ than the market thinks

In the update, Wilson said the transaction would provide “immediate low, double-digit earnings per share (EPS) accretion, including tax and interest benefits.”

Furthermore:

We are positive on this strategic transaction for the company, with the move to 100% ownership in TI expected to unlock a range of additional growth opportunities for the business.

[The company] also provided a trading update during the month, with FY2022 earnings guidance in-line with consensus analyst expectations.

Despite broader macroeconomic uncertainty, the company noted strong momentum across all markets into FY2023 and we believe earnings will prove more resilient versus market expectations.

The Carsales share price lost about 8% in value over FY2022.

Capital raising completed

In an announcement to the ASX today, Carsales said it has completed the retail component of its fully underwritten one for 4.16 pro-rata accelerated non-renounceable entitlement offer.

Carsales announced the offer to the market on 27 June and it closed on Wednesday.

This is the final stage of the overall $1.207 billion equity raising to enable Carsales to buy the remaining 51% interest in Trader Interactive for US$809 million.

The retail offer was open to approximately 19,000 Carsales shareholders and 8,000 elected to participate.

The offer price was A$17.75 and approximately 10.3 million new Carsales shares were subscribed. This raised A$183 million.

Approximately 10.1 million new shares that were not taken up will be allocated to the sub-underwriters.

A separate offer to institutional investors had a 90% take-up and those new shares are already trading.

Carsales expects to settle the retail offer on 19 July. These Carsales shares will begin trading on 21 July.

The post Why this expert tips a ‘range of additional growth opportunities’ for Carsales shares appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX shares today
• Why Carsales, EOS, Imugene, and Tyro shares are sinking today
• Here’s why ASX 200 tech shares are taking a beating on Wednesday
• ASX 200 midday update: Carsales sinks, Liontown jumps on Ford agreements
• Why is the Carsales share price crashing 15% lower today?

Motley Fool contributor Bronwyn Allen 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 recommended carsales.com 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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The market is tumbling towards the end of the week, with the All Ordinaries Index (ASX: XAO) slipping 0.78% lower. Fortunately, not all ASX All Ords shares are joining the index in its suffering.

These three stocks are posting notable gains on Friday. Keep reading to find out what’s buoying their share prices amid today’s sea of red.

3 ASX All Ords shares defying today’s downturn

Sezzle Inc (ASX: SZL)

The share price of All Ords BNPL favourite Sezzle has climbed back on the horse today, recovering some of the 57% fall it posted over the first four days of the week.

Right now, the Sezzle share price is trading 2.5% higher at 20.5 cents.

The company binned its planned multi-million-dollar merger with fellow ASX BNPL favourite Zip Co Ltd (ASX: ZIP) earlier this week.

Its stock plummeted nearly 39% when the news was released on Tuesday before slipping another 22% on Wednesday.

Michael Hill International Ltd (ASX: MHJ)

Sezzle is joined in the green today by shares in its ASX All Ords peer Michael Hill.

The jewellery retailer’s share price has lifted 3.7% to trade at $1.12 right now.

Its gains come on the back of a trading update detailing decent growth in the June quarter, topping off a strong full year of sales, released after the market closed on Thursday

The company’s managing director and CEO Daniel Bracken commented on its recent performance, saying:

I’m delighted with our full year trading results, despite the continued backdrop of COVID disruptions and the resulting loss of 10,000 store trading days, we have delivered the highest sales and margin in the history of the Michael Hill brand.

Booktopia Group Ltd (ASX: BKG)

The final ASX All Ords share recording a decent gain on Friday is Booktopia.

Its share price is currently 33.5 cents, 8.06% higher than its previous close.

There’s been no news from the online book retailer today.

However, its shares tumbled nearly 5% yesterday when the company announced it had dumped its CEO Tony Nash following an internal business review.

The post 3 ASX All Ords shares sidestepping the selling today appeared first on The Motley Fool Australia.

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More reading

• Why Ardent Leisure, Michael Hill, National Storage, and WiseTech shares are rising
• Penny-pincher: Where Sezzle shares could be heading from here
• What’s the outlook for ASX BNPL shares in FY23?
• Why Galileo Mining, Platinum, Sezzle, and Woodside shares are dropping
• Sezzle shares plunge another 16%, now down 60% in a week

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Booktopia Group Limited. The Motley Fool Australia has no position in any of the stocks mentioned. 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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Sadly for investors, the S&P/ASX 200 Index (ASX: XJO) has decided to give us a backwards day on this last trading day of the week. At the time of writing, the ASX 200 has dropped by an unwelcome 0.75% to around 6,600 points. 

But rather than letting that ruin our weekends, let’s focus on the ASX shares that are currently at the top of the ASX 200’s share trading volume charts, according to investing.com.

The 3 most traded ASX 200 shares by volume this Friday

Fortescue Metals Group Limited (ASX: FMG)

A rare appearance from iron ore giant Fortescue marks our first ASX 200 share today. This Friday has seen 7.69 million Fortescue shares swap hands as it currently stands. There’s been no news out of the miner so far today.

So we can probably assume this volume is the result of the dip in the Fortescue share price itself. Fortescue has lost a nasty 4.71% today and is down to $16.59 a share, amid a big fall in commodity prices over the past 24 hours.

BHP Group Ltd (ASX: BHP)

Another rare appearance, next up we have the ‘Big Australian’, and largest share on the ASX 200, BHP. This Friday has seen a notable 8.23 million BHP shares change owners so far today.

Just like with Fortescue, this seems to be a consequence of the share market’s moves. BHP has also copped a big hit, falling by 3.26% to $36.18 a share.

South32 Ltd (ASX :S32)

And it’s three for three today in terms of ASX 200 mining shares, with diversified resources company South32 taking out the final and most traded medal. So far today, a sizeable 11.3 million South32 shares have been bought and sold on the public markets.

Once more, it seems as though a nasty share price drop is the culprit here. So far this Friday, the South32 share price has lost 3.67% of its value and is now down to $3.41 a share.

The post Here are the 3 most heavily traded ASX 200 shares on Friday appeared first on The Motley Fool Australia.

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More reading

• Why BHP, Jumbo, Pendal, and Rio Tinto shares are sinking today
• Australia’s unemployment rate is at a 48-year low. What’s this mean for ASX 200 shares?
• Why is the Newcrest share price slipping to a new 52-week low on Friday?
• Here’s why the Fortescue share price is falling 6% into the dirt today
• These ASX 200 mining shares are getting buried. What’s happening?

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 no position in any of the stocks mentioned. 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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The S&P/ASX 200 Index (ASX: XJO) is having a tough finish to the week. In afternoon trade, the benchmark index is down 0.75% to 6,600.9 points.

Four ASX shares that have not let that hold them back are listed below. Here’s why they are rising:

Ardent Leisure Group Ltd (ASX: ALG)

The Ardent Leisure share price is up 4% to 54.7 cents. This may have been driven by comments out of WAM Capital Limited (ASX: WAM), which described the entertainment company as undervalued. It said: “We believe Ardent Leisure Group’s current share price materially undervalues the company relative to global peers, while opportunity exists to unlock further value via development of excess land assets.”

Michael Hill International Ltd (ASX: MHJ)

The Michael Hill share price is up 4% to $1.12. This morning this jewellery retailer released a trading update and revealed strong quarterly sales growth. This is expected to underpin a 7.3% increase in full-year sales in FY 2022. EBIT is expected to be between NZ$60 million and NZ$63 million, up from NZ$56.6 million in FY 2021.

National Storage REIT (ASX: NSR)

The National Storage share price is up over 2% to $2.25. This appears to have been driven by a broker note out of Ord Minnett. This morning its analysts retained their buy rating and lifted their price target on the self-storage centre operator’s shares to $2.70. It was pleased to see management guide to earnings growth ahead of consensus estimates in FY 2022.

WiseTech Global Ltd (ASX: WTC)

The WiseTech share price is up 3.5% to $44.22. Investors have been buying this logistics solutions company’s shares after it upgraded its FY 2022 earnings guidance. Due to strong top line growth and cost efficiencies, FY 2022’s EBITDA is now forecast to be between $310 million and $320 million. This compares to its previous guidance range of $275 million to $295 million.

The post Why Ardent Leisure, Michael Hill, National Storage, and WiseTech shares are rising appeared first on The Motley Fool Australia.

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More reading

• Ardent Leisure share price ‘materially undervalued’: expert
• ASX 200 midday update: Rio Tinto’s update, BHP and Fortescue sink, AVZ remains suspended
• WiseTech share price leaps 7% higher following upgraded guidance
• What I’d do with 3 ASX shares that have plunged this year: expert
• ‘Pretty attractive’: Expert reveals 3 ASX shares to buy right now

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. 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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After a brutal start to this Friday’s trading session, the All Ordinaries Index (ASX: XAO) has recovered somewhat. At the time of writing, the All Ords is still down by 0.72% at around 6,800 points after going as low as 6,733 points this morning.

So it goes without saying that there are many ASX All Ords shares tumbling in value today as we head into the weekend. Let’s look at three notable examples.

3 ASX All Ords shares falling on Friday

Jumbo Interactive Ltd (ASX: JIN)

The only jumbo thing about this ASX share today is the size of its fall. The gaming company has had a shocker this Friday, falling by 14.85% at the time of writing to $12.33 a share. That’s also a new 52-week low for the company.

These moves seem to be a response to the release of the company’s preliminary full-year earnings this morning. As we covered earlier today, Jumbo disappointed investors with a miss on revenues, earnings and net profits. Ouch.

Bluebet Holdings Ltd (ASX: BBT)

Another All Ords gaming share, Bluebet, is also having a clanger. At present, the Bluebet share price has lost a meaty 10.83% and is back to 54 cents a share. The company went as low as 51 cents this morning, which fortunately is still a fair way from its 52-week low of 37 cents.

There’s been no news out of Bluebet today, or indeed this week. So perhaps this fall is a side effect of the tumble Jumbo shares have taken, given both companies are in the gaming space.

Starpharma Holdings Limited (ASX: SPL)

Starpharma is not a gaming company but a healthcare share, as its name implies. But that hasn’t saved it from a displeasing fall today. The Starpharma share price is currently down by 8.84% at 67 cents a share after dipping to 66 cents earlier today. That’s not too far from this company’s 52-week low of 62 cents.

There’s been no news our of this company either. So it’s not too obvious what’s going on here. Starpharma shares have been incredibly volatile over the past week though. The company rose more than 8% yesterday (also on no news) so perhaps investors have gotten cold feet now that the market is falling.

The post 3 ASX All Ords shares tumbling into the weekend appeared first on The Motley Fool Australia.

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More reading

• Why BHP, Jumbo, Pendal, and Rio Tinto shares are sinking today
• Jumbo share price sinks 10% on FY22 earnings miss
• Sezzle shares plunge another 16%, now down 60% in a week
• Here’s a look at the 5 best ASX All Ords tech shares in FY22
• Becoming Australia’s biggest export failed to ignite ASX coal shares 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 positions in and has recommended Jumbo Interactive Limited and Starpharma Holdings Limited. The Motley Fool Australia has recommended BlueBet Holdings Ltd, Jumbo Interactive Limited, and Starpharma Holdings 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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The Lynas Rare Earths Ltd (ASX: LYC) share price is edging higher today on no news.

At the time of writing, the Lynas share price is trading at $8.21 apiece, more than 1% in the green.

In broad market moves, the S&P/ASX 300 Metals and Mining Index (ASX: XMM) has slipped more than 3% on Friday as the sector continues a weak spell.

What’s up with the Lynas share price?

Despite no market sensitive news today, Lynas caught a bid yesterday following the the final session of the Sydney Energy Forum.

The large-scale event brought together numerous energy industry stakeholders, politicians and company executives.

Lynas CEO, Amanda Lacaze, was amongst the several Australian company executives to speak at the forum on 12 June.

Lacaze told the Forum markets are increasingly recognising that “singular supply chain is a risk” and that Lynas is “seeing increased interest in outside-China governments”.

Meanwhile, Dr Faith Birol, International Energy Agency (IEA) executive director, noted China’s 80% global supply of rare earths and advocated for this to change.

With its position as the only producer of rare earths at scale outside of China, Lynas is poised to benefit from such a structural shift.

It’s unlikely the various language used at the Sydney Energy Forum had any material impact on the Lynas share price.

Nevertheless, industry heavyweights are pushing for a change. Lynas’ CEO Lacaze was supportive of the move after recognising the “further challenges [faced] in terms of resilient supply chains”.

The Lynas share price is up 35% in the past 12 months.

 

The post Odd one out: Lynas share price inches ahead while miners drill down appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX shares today
• Could this be why the Lynas share price is rallying 6% today?
• The Lynas share price soared 53% in the 2022 financial year. Here’s what happened
• Why did the Lynas Rare Earths share price tumble in June?
• Own Lynas shares? Here’s the latest challenge faced by the rare earths miner

Motley Fool contributor Zach Bristow 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 no position in any of the stocks mentioned. 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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to end the week with a decline. At the time of writing, the benchmark index is off its intraday lows but still down 0.65% to 6,606.4 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are sinking:

BHP Group Ltd (ASX: BHP)

The BHP share price is down 3.5% to $36.10. Investors have been selling BHP and other miners today after the iron ore price pulled back. According to CommSec, the iron ore futures price dropped US$5.30 or 4.8% overnight to US$104.96 a tonne. The steel making ingredient came under pressure after Chinese authorities grappled with a wave of mortgage boycotts sweeping the country’s property sector.

Jumbo Interactive Ltd (ASX: JIN)

The Jumbo share price has sunk 15% to $12.26. This follows the release of the lottery ticket seller’s preliminary full-year results. Jumbo’s revenue and earnings came in short of the market’s expectations. In addition, the company warned that margin pressures would persist in FY 2023 even before an increase in its service fee to Lottery Corporation Ltd (ASX: TLC) from 2.5% to 3.5%.

Pendal Group Ltd (ASX: PDL)

The Pendal share price is down 8% to $3.76. The catalyst for this has been the release of the fund manager’s latest funds under management (FUM) update. That update revealed that Pendal’s FUM tumbled 11% during the June quarter.

Rio Tinto Limited (ASX: RIO)

The Rio Tinto share price is down 2% to $93.96. This mining giant’s shares are falling after the iron ore price pullback offset the release of the company’s second quarter update. During the quarter, the mining giant delivered iron ore shipments of 79.9Mt. This was ahead of the market consensus estimate of 79.3Mt. Rio Tinto also reaffirmed its full year iron ore guidance for costs and shipments.

The post Why BHP, Jumbo, Pendal, and Rio Tinto shares are sinking today appeared first on The Motley Fool Australia.

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More reading

• Pendal share price slumps 10% to multi-year low amid continued outflows
• These ASX 200 mining shares are getting buried. What’s happening?
• ASX 200 midday update: Rio Tinto’s update, BHP and Fortescue sink, AVZ remains suspended
• Here’s why the BHP share price is stumbling on Friday
• Jumbo share price sinks 10% on FY22 earnings miss

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Jumbo Interactive Limited. The Motley Fool Australia has recommended Jumbo Interactive 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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Australia’s economy continues powering home in 2022. The national unemployment rate sunk to a 48-year low last month, while a record number of job vacancies were reported. But is this good news for ASX 200 shares?

These statistics were released in the Australian Bureau of Statistics (ABS) Labour Force summary for June 2022.

The ASX absorbed the news yesterday but investors weren’t so fortunate today. At the time of writing, the benchmark S&P/ASX 200 Index (ASX: XJO) is 0.7% in the red at 6,604 points.

With net employment figures more than 194% above the June forecasts, what does this mean for ASX 200 shares?

Job numbers equal strong economy, market says

More than 438,000 additional Aussies have gained employment this year to date, bringing the participation rate to around 67%.

The jobless rate fell to 3.5%, around 30 basis points off the forecasts of 3.8%. There haven’t been this many Australians in work since 1974.

This creates a systematic dilemma for the Reserve Bank of Australia (RBA), charged with managing inflation and tilting economic growth (GDP) with monetary policy.

One of the functions of the RBA is to keep inflation between 2% and 3%, a mandate it is currently not fulfilling.

The RBA now has to balance the delicate task of tightening near record-high inflation and sustaining a reasonable level of GDP.

However, the latest data indicates a strong economy, which equals high inflation. The market continues to price this in accordingly.

What do the experts say?

Goldman Sachs economist Andrew Boak (quoted by Reuters) said: “With the unemployment rate at a 48-year low, surveyed business conditions well above long-run averages, and COVID-related mobility restrictions fully eased, the economy is bumping-up against capacity constraints in many areas.”

However, as Boak notes, the RBA will struggle to clip inflation without enforcing some form of demand destruction, resulting in a potential recession.

“The Australian economy remains on a path to much higher inflation and interest rates, having entered the tightening cycle with strong momentum,” he said.

Further rate hikes by the RBA are predicted, which could hurt growth and tech ASX 200 shares even further.

The good news is that if inflation cools rapidly, the RBA won’t have to tighten inflation so aggressively. However, inflation data remains strong, and surged to 9.1% in the United States in June.

Plus, high employment puts pressure on the labour market and increases wage growth, thereby increasing purchasing power and deposits.

What about ASX 200 shares?

It then becomes a question of what ASX 200 shares will do well in what situation. If we enter a recession, for instance, defensive shares are seen as the most sensible play.

In a recent update, PIMCO bond portfolio manager John Waltwies said it’s going to “be a year when investors pivot from worrying about inflation to worrying about recessions”.

“Investors … should be thinking about how they can build some more resilience into their portfolios,” he said. “So, thinking about going up in quality, up in liquidity.”

This sentiment was echoed by analysts at HB Insights in a recent note. They said that “[p]rofitability and cash flow metrics [are] quality factors investors are now paying a premium for”.

Meanwhile, Goldman Sachs equity strategist David Kostin said: “Roughly a third of investors’ portfolios should focus on companies with a ‘margin of safety’, meaning they would still be attractively valued even if their earnings fell by 20%.”

This “should be coupled with high-dividend stocks, which are arguably the most dislocated part of the market today,” he added.

Diversification is also something to consider. Usually, there’s a diversification benefit between stocks and bonds. However, as researchers at JP Morgan recently found, that relationship breaks down in times of high inflation.

As such, both stocks and bonds have suffered their worst pain on record this year, and the traditional “60/40” portfolio (60% allocated to stocks, 40% to bonds or bond ETFs) has incurred some of its worst losses ever, the broker said.

The relationship is shown on the chart below, using the US market instead of the ASX 200. When inflation began to tick up, shares and bonds began to fall.

Hence, if an economy is heading towards a recession, experts suggest focusing on companies that sit within the ‘quality’ pocket of the market.

If inflation remains between 3% and 5%, this could force the RBA to tighten even further, reinforcing the cycle.

Time will tell where we head next.

The post Australia’s unemployment rate is at a 48-year low. What’s this mean for ASX 200 shares? appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow 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 no position in any of the stocks mentioned. 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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