Should we reconsider the Supermarkets as the ASX “wobbles”?

The Consumer Staples Sector has been very weak on the ASX, significantly underperforming the US equivalent. Unfortunately, there are many “like for like” examples of local stocks delivering dismal returns compared to their US peers. There are a number of obvious reasons behind the recent pullback in the local sector, including wage pressure and a Senate inquiry into supermarket competition and prices. The final report is due to be provided no later than 28 February 2025, i.e. plenty of uncertainty through 2024.  We love an inquiry in Australia!

• We believe the local Consumer Staples Sector will slowly start to firm as we approach February, i.e. the end to uncertainty.

It’s a small sector locally, dominated by three names and this morning we pose the question of whether MM should be looking more closely at increasing our exposure to this traditionally defensive area.