Listen to Dianne Colledge on SBS On The Money
Dianne Colledge, private client adviser at Morgans, joined SBS Finance Editor Ricardo Gonçalves on SBS On the Money on Friday 17 April 2026, discussing why the ASX ended a three-week winning streak despite fresh record highs on Wall Street, the tech stock rally, and where Morgans sees value for investors. Listen to the full episode below.
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When a major broker downgrades a sector, it's easy to assume it's time to sell. Citi's recent downgrade of major discretionary retail stocks may actually be signalling the opposite for value-focused investors. Dianne Colledge explains why she sees names like JB Hi-Fi and Wesfarmers as a potential buying opportunity, even as interest rates are expected to rise further.
Key summary
- Citi has downgraded major ASX discretionary retail stocks, including JB Hi-Fi and Wesfarmers, citing rising prices and expected further interest rate increases that could hit consumer spending.
- Morgans' in-house economist expects two more RBA interest rate rises, with the first likely as early as May 2026.
- Dianne Colledge sees the downgrade as a potential buying opportunity, arguing that squeezed consumers will shift toward lower-price-point retailers rather than stop spending altogether.
- Wesfarmers' exposure to Kmart, Target, Officeworks, and Bunnings positions it well for value-conscious shoppers, alongside JB Hi-Fi and Sigma Pharmaceuticals (owner of Chemist Warehouse).
- Meanwhile, a broader tech stock rally, both in the US and on the ASX, is unfolding as investors rotate from chipmakers into previously beaten-up software names.
Why did Citi downgrade JB Hi-Fi and Wesfarmers?
Citi's downgrade of major discretionary retail names reflects concern that rising prices, combined with further expected interest rate rises, will squeeze household budgets and reduce discretionary spending. According to Morgans, this view has merit: the firm's in-house economist expects two more RBA rate rises, with the first potentially landing as early as May 2026. Higher borrowing costs directly reduce how much households have left over for discretionary purchases.
Why Dianne Colledge sees this differently
Dianne's view is that a downgrade based on tighter consumer spending doesn't necessarily mean less spending overall, it often means a shift in where consumers spend. As she puts it, when households have less to spend, they look for bargains and lower price points rather than cutting out purchases entirely.
Which ASX retail stocks is Morgans backing, and why?
The common thread across all three names is exposure to value-oriented retail, businesses that tend to gain market share, not lose it, when household budgets tighten.
The bigger picture: ASX and US markets on 17 April 2026
For context, this stock-specific view came against a broader market backdrop:
- The ASX 200 fell 0.1 per cent on the day, and around 0.2 per cent for the week, snapping a three-week winning streak.
- US markets told a different story, with both the S&P 500 and Nasdaq closing at fresh record highs overnight.
- The Australian dollar eased slightly to buy 71.7 US cents.
- Oil closed up 3 per cent, just over USD $98 a barrel.
- Consumer discretionary stocks broadly underperformed on the day, with Harvey Norman among the fallers following Citi's warning on tighter financial conditions.
- Buy-now-pay-later operator Zip was among the day's best performers, following a positive US transaction report.
Why are US shares hitting records despite global uncertainty?
Dianne notes that markets tend to look through short-term geopolitical noise, including ongoing Middle East conflict, and focus on the medium-term outlook instead. Part of this confidence also reflects a strong start to US reporting season, with particularly solid results from the banking sector so far, seen as an early signal that the US consumer and broader economy remain resilient.
The tech stock rotation: from chipmakers to software
A notable theme Dianne flagged is a "reversal trade" playing out in tech markets, where investors have been rotating out of chipmakers and into previously beaten-up software names. This shift was reportedly triggered as the software index moved back through its 50-day moving average.
US software stocks leading the rally
- Oracle: up 28%
- Microsoft: up 13%, its best six-day run in two to three years
- Salesforce: up 10%
Australian tech stocks riding the same wave
- Megaport: up 24% over the past week, including 12% in the last two days
- WiseTech: up 14%
- Carsales: up 9%
- NextDC (data centre operator): up 14%
- TechnologyOne: up 12% for the week
This local tech rebound is notable given the broader ASX 200 was down for the day, showing a clear sector-level divergence.
Frequently asked questions
Why did Dianne Colledge say the Citi retail downgrade is a buying opportunity?
Because a downgrade driven by expectations of tighter consumer budgets doesn't necessarily mean less overall spending, it often means a shift toward lower price-point retailers. Wesfarmers, JB Hi-Fi, and Sigma Pharmaceuticals are all positioned to benefit from consumers trading down rather than trading out.
Will interest rates rise again in Australia in 2026?
Morgans' in-house economist expects two more RBA interest rate rises, with the first potentially arriving as early as May 2026, which is expected to further pressure discretionary consumer spending.
Why are ASX tech stocks rallying while the broader market is down?
A rotation trade is underway, particularly in the US, where investors have been buying previously underperforming software stocks and selling chipmakers. This has flowed through to Australian tech names such as Megaport, WiseTech, and NextDC, even as the broader ASX 200 slipped on the day.
Is JB Hi-Fi a good buy right now?
Dianne Colledge views JB Hi-Fi favourably, partly due to a "cyclical replacement trade" where consumers upgrade computers and devices to access newer technology such as AI applications, often at accessible price points. This is general commentary only and not personal financial advice.
Why are US shares at record highs despite the war in the Middle East?
According to Dianne, markets tend to look through short-term geopolitical uncertainty and focus on the broader outlook, particularly when strong reporting season results, such as those recently seen from US banks, suggest underlying economic resilience.
