The top 5 ASX-listed stocks to watch in April 2024

The state of the market in April

April 2024 could be the start of a promising period for Australian equities, with widespread expectations that the Reserve Bank of Australia (RBA) is on the verge of cutting interest rates now that inflation is showing signs of waning and fears are mounting over the potential for a recession if borrowing costs don't come down.

The RBA kept its cash rate target on hold again in March, lending further impetus to expectations that interest rates have peaked and could soon be on the way down. The cash rate target currently sits at a 12-year high of 4.35%, following a spate of successive hikes launched to deal with rampant, post-Covid inflation.

All four of Australia big four banks expect the RBA to cut its cash rate target during the second half of 2024, with the CBA going so far as to expect the equivalent of three 24 basis-point cuts by the end of the year.

According to CBA's head of Australain economics Gareth Aird, consumption posted a meagre 0.1% rise from a year earlier, prompting concerns amongst central bank officials that unemployment could rise if rates aren't reduced.

'A series of cuts will be required to prevent the unemployment rate from rising to the levels thae RBA does not want to see it get to,' Aird said.

All of this could bode well for Australian equities, given cuts to interest rates tend to boost economic activity and provide upward pressured for share prices.

The top five ASX-listed stocks to watch

For those invesstors who think now might be a good time to capitalise upon imminent rate cuts, here is a list of five ASX-listed stocks that are well worth watching:

1. Resmed CDI (ASX: RMD)
2. Macquarie Technology Group Ltd (ASX: MAQ)
3. Rural Funds Group (ASX: RFF)
4. Readytech Holdings Ltd. (ASX: RDY)
5. Xero (ASX: XRO)

Resmed CDI (ASX: RMD)

Medical device maker [shares: RMD-AU] recently took a hit due to the sudden popularity of weight loss drugs such as Ozempic, which investors saw as putting a dent in demand for sleep apnea treatments.

Investors may have overestimated the impact of weight loss treatments on Resmed's product line, which seek to address a range of ailments including sleep apnea, chronic obstructive pulmonary disease and other respiratory diseases. These afflictions could remain widepsread amongst healthcare consumers going ahead, given the cost of drugs such as Ozempic as well as ongoing uncertainty concerning sideaffects.

Macquarie Technology Group Ltd (ASX: MAQ)

Data-center operator Macquarie Telecom Group Limited could see its share price rise on surging demand for quality data created by the ongoing explosion in artificial intelligence applications.

The company already has plans to expand the capacity of its IC3W campus in Sydney from 38MW to 45MW, in order to deal with an anticipated upsurge in service demand.

Goldman Sachs is upbeat about the company, giving it a buy rating and a price target of $93.00.

Rural Funds Group (ASX: RFF)

Rural Funds Group is a real estate investment trust (REIT) that holds $1.9 billion in agricultural assets including farm land. The company is highly leveraged, however, with $701 million in debt used to support its asset holdings.

Given the copious size of its balance sheet and its high levels of leverage, Rural Funds stands to benefit significantly should the RBA begin to cut interst rates later this year, helping to reduce the burden of its borrowing costs.

Readytech Holdings Ltd. (ASX: RDY)

Enterprise software provider ReadyTech Holdings Limited may have just tapped an inflection point in terms of margins, prompting analysts at Goldman Sachs to anticipate an earnings performance ahead of market expectations.

'The margin inflection point has arrived and we see material upside to both Visible Alpha Conesnsus Data estimates and valuation upon execution towards mid-term targets,' Goldman analysts said.

The brokerage maintains a buy rating for Reaedytech with a price target of $4.25.