Low growth and rising prices
During stagflation, historical market data and analysis from firms like Schroders show that defensive sectors and hard assets tend to outperform.
Energy, utilities, basic consumer staples, and commodities historically hold their value best, while growth stocks, tech, and consumer discretionary shares struggle.
Winning Sectors and shares
Energy: Oil and gas producers benefit directly when high energy costs drive inflation. Examples include major integrated oil stocks like Shell or BP, and sector ETFs like XLE.
Consumer Staples: Companies selling essential everyday items can raise prices without losing buyers. Examples include giants like Nestlé, PepsiCo, and Coca-Cola.Utilities: Regulated providers of power, water, and gas offer stable cash flows and defensive dividends. Examples include Duke Energy or Southern Company.Commodities and
Gold: Safe-haven assets and materials retain purchasing power during high inflation. Examples include gold miners like Newmont or Barrick Gold, and funds like SPDR Gold Shares (GLD).
Sectors to Avoid
Information Technology: High-valuation tech and long-duration growth shares suffer as future earnings get discounted by sticky inflation and high rates.
Consumer Discretionary: Retailers and makers of non-essential luxury goods drop as consumer budgets get squeezed.
Financials: Banks and lending institutions struggle with a slowing economy and weaker credit repayment.
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