Bulls vs bears: Which sectors are investors backing and bailing on?

When analysing how well a portfolio fits the current environment, the process often involves scrutinising macro first, then the sector, then the stock.

The team at investment and advisory group Jarden have the sector part of the puzzle sorted. In a recent note, they shared what's been moving at a sector level, and what catalysts could drive future movements.

Jarden’s latest Bull & Bear Index, which tracks analyst recommendations across the ASX, shows that while overall bullish sentiment hasn’t dropped much, it’s evolving sector by sector.

Despite high market volatility and rising global uncertainty, analysts remain mostly upbeat on ASX-listed stocks.

Here’s a breakdown of what’s moving.

Energy: Losing power

The energy sector has seen the biggest drop in sentiment since February.

"We had previously viewed the energy sector sub-index as overly optimistic relative to the global backdrop, so the bearish shift is now more consistent with cyclical factors."

While there’s still support for the long term, it looks like sentiment has reached its peak.

Technology: Still the favourite

Tech remains the most bullish sector by far. Even with market volatility, analyst confidence in tech hasn’t wavered.

This is being driven by strong fundamentals around AI adoption and productivity growth, which are expected to support future earnings. 

There’s also talk of deregulation in the US that could benefit the sector, although global trade tensions have taken the spotlight for now.

Materials: Building confidently

Non-energy materials have made the sharpest positive turn since February. With housing activity likely to pick up, the materials sector is getting a boost.

The change reflects several key changes in the landscape - lower construction costs, rate cuts from the RBA, and the expected (and subsequent) re-election of the Labor Government. 

"The improvement is consistent with expectations for a pickup in dwelling construction...coinciding with a moderation in construction costs." 

Analysts turned less bearish as of April, which has helped lift sentiment.

Consumer sector: Treating itself

There’s been a small but clear improvement in analyst views on consumer stocks.

Better domestic fundamentals, more government support, and expectations of continued RBA rate cuts are behind the lift. Now the election is out of the way, and with the RBA May rate cut, there’s more confidence that spending will improve.

Healthcare: Monitoring its well-being

Healthcare remains broadly bullish, but analysts are becoming more cautious as Jarden sees a rise in neutral recommendations.

Local policy support and easing financial conditions have been positive for healthcare stocks domestically, however, "global uncertainty is a key near-term risk for the healthcare sector".

This is being driven by an executive order by the US administration to lower drug pricing which is expected to put pressure on pharmaceutical companies to negotiate price discounts for the US. The uncertainty around potential tariffs for the industry are also a concern.

Financials and Industrials: A slow and steady upward climb

Financial stocks are also seeing a slow shift in the right direction. The improvement in sentiment is mainly due to more analysts turning bullish.

It’s a similar story for industrials, where upgrades are starting to build again after a quiet patch.

Utilities and Business Services: Hot and cold

Utilities are another area where sentiment is improving, likely because of their stability and appeal in a lower-rate environment.

Business services, on the other hand, are seeing more neutral and bearish calls. That could reflect growing uncertainty around earnings or stretched valuations in some parts of the sector.

Wrap up

Jarden’s Bull & Bear Index shows that analyst sentiment remains broadly positive but it is shifting underneath the surface as seen when breaking it down by sector. 

Some sectors that were riding high, like energy, are coming back down. Others, like tech and materials, are gaining momentum thanks to structural tailwinds and policy support.