Despite the global uncertainty, here's why Macquarie remains bullish on ASX shares

The broker is bullish despite recent volatility.

bull market encapsulated by bull running up a rising stock market price

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Macquarie is bullish on ASX shares despite recent volatility 
  • The broker says to position towards resources and likes the outlook for Australian equities 
  • Resources, mining and energy continue to be the major drivers of returns on the ASX today 

Markets are lifting in afternoon trade on Thursday with the benchmark S&P/ASX 200 Index (ASX: XJO) resting 105 basis point up at 7,337.

The big end of town is joined by Australian small caps today as well with the S&P/ASX Small Ordinaries Index (XSO) also up by 74 basis points.

Meanwhile, the S&P/ASX 300 Metals and Mining Index (ASX: XMM) is leading today with a circa. 3% gain, just ahead of the S&P/ASX 200 Materials Index (ASX: XMJ) and S&P/ASX 200 Resources Index (ASX: XJR).

The distribution of these returns feeds into why one broker is bullish on ASX shares rolling through 2022 and beyond.

TradingView Chart

Why is Macquarie bullish on ASX shares?

After reviewing the current state of affairs, investment bank Macquarie has urged its clients to tilt their portfolios towards domestic shares, particularly amid tensions in Europe.

It also recommends concentrating on resources stocks over industrials in preference, considering the macroeconomic climate that's driving up commodity prices.

Although, with commodity indices racing to multi-year highs in 2022, it mightn't come as a surprise. Brent Crude oil has surged 52% in the past 12 months whereas gold is still up 6% despite a sharp pullback recently.

Meanwhile, commodity-popstar lithium has still booked a 434% gain during the last year, and energy markets including coal and natural gas have secured triple-digit returns as well.

And let's not overlook agricultural and food-based commodities. Except for lumber, the entire 'ag-com' basket is trading well into the green.

Most recently that's been spurred on by Indonesia's decision to scale back RBD palm oil exports.

"The world's top producer [Indonesia] announced such a move in further effort to stabilise domestic prices, and authorities will assess local supply regularly," as calculated by Trading Economics.

There's talk such a move could add further pressure on agricultural commodities.

However, there are two sides to every trade. And as commodity prices surge, there's sure to be a long list of winners in 2022, Macquarie says.

Macquarie equity strategist Matthew Brooks said that "[e]asing lockdowns and more China stimulus should support commodities," in a note, cited by The Australian.

Fed tightening remains a headwind for growth and valuations, and we still think this headwind will be greater for Industrials than Resources.

We still think the war in Eastern Europe is positive for Australia and continue to see inbound interest in ASX stocks from global investors.

The strategist's outlook aligns with the current macro-thematic it seems, as ASX shares continue to shrug off pressures seen in European and US markets so far in 2022.

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 recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Broker Notes

Man smiling at a laptop because of a rising share price.
Broker Notes

4 ASX shares to buy this week: experts

Looking for investment inspiration?

Read more »

Excited couple celebrating success while looking at smartphone.
Broker Notes

Macquarie forecasts 28% upside for this ASX All Ords stock

Let's see why the broker is feeling bullish about this name.

Read more »

A share market analyst looks at his computer screen in front of him showing ASX share price movements
Broker Notes

What's Macquarie focused on this earnings season?

Here's what the broker is saying about next month's results releases.

Read more »

A young man goes over his finances and investment portfolio at home.
Broker Notes

Should you buy Zip shares and sell NextDC shares?

Let's see what one analyst is saying about these popular shares.

Read more »

Two brokers analysing stocks.
Broker Notes

Morgans names 2 ASX shares to buy and 2 to hold

Let's see what the broker is saying about these shares.

Read more »

Hand holding out coal in front of a coal mine.
Broker Notes

Up 379% in 5 years, are Whitehaven Coal shares now a buy, hold or sell?

Here’s what Macquarie is forecasting for Whitehaven Coal shares into 2026.

Read more »

Woman with gold nuggets on her hand.
Broker Notes

Expert tips further upside for this surging ASX 200 gold stock

How much fuel is left in the tank for this gold mining heavyweight?

Read more »

A cute young girl with curly hair sips a glass of milk through a straw with a smile on her face.
Broker Notes

Up 37% this year, why Macquarie expects A2 Milk shares to keep outperforming

Macquarie remains bullish on A2 Milk shares heading into 2026. Let’s see why.

Read more »