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Political backlash weighs on utility stocks

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Morning – Nicki Bourlioufas

AGL and Spark Infrastructure have had a strong run recently, and while some expect this to continue, their performance may be tempered by political and regulatory pressures.

Flat bond yields and ongoing defensive positioning by retail investors, as they seek to buffer stock market volatility, are among the main reasons for positivity on the sector.

Morningstar equity analyst Adrian Atkins believes this environment further bolsters the appeal of income-oriented stocks.

He says the outlook for lower global bond yields has been a key driver of the relatively strong share price performance of both AGL (ASX: AGL) and Spark (ASX: SKI).

“Weakening global economies would also see investors switch out of economically sensitive stocks into more defensive stocks [such as AGL and Spark],” says Atkins.
Bond yields have been relatively flat since early 2018, reflecting concerns that the Australian and global economies could be slowing.  Read the full article here.