Defensive Stocks Look Good Early Bets on AI Capex Slowdown

Dow Jones10-19

2243 GMT - AI capex has been a key support for global growth. But Macquarie notes a Fed rate hike and AI funding issues increase risks of an AI capex slowdown in 2027. "We think this would result in a growth scare that should drive down bond yields before central banks pivot to cuts next year," Macquarie says. Falling bond yields initially favor defensive stocks, such as infrastructure and property. Rate cut winners like retail work better closer to cuts, Macquarie says. "RBA tone is currently at its most hawkish in the 20-year history of our series, making the next shift more likely to be less hawkish and consistent with falling yields," Macquarie says. "The case for a pause is growing as consumer and business confidence weaken and unemployment rises."

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