“There are already signs that RBA rate cuts are starting to gain traction and stimulate the economy,” said T. Rowe Price head of Australian equities Randal Jenneke.

“Auction clearance rates in Sydney and Melbourne have nearly doubled, while home prices have risen by 5 to 10 per cent depending on which region.

“We also expect to see a more expansionary fiscal policy from the government that will support growth in 2020. Australia has strong public sector financial which allows the Coalition government to do more to support a sluggish economy.”

Mr Jenneke said the retail sector in particular was “well positioned” to benefit from Australia’s economic recovery, particularly better-quality home improvement and domestic discretionary retailers.

“We see a stronger economy as benefiting some domestic cyclical stocks that have been out of favour with investors,” he said.

“This is one area where our investment views are somewhat contrarian. A more positive view relative to our peers on Australian domestic cyclicals is reflected in our holdings of stocks such as JB HiFi and Wesfarmers.”

He added that while home building activity was likely to remain flat in the coming year, increased activity in the property sector more generally could be beneficial for some real estate stocks.

“Although building approvals continue to decline, there are signs they are stabilising, albeit there will likely be a lag of 12 to 18 months before residential housing activity begins to rise in a material way,” Mr Jenneke said.

“We believe companies that service the housing sector and which are exposed to improving transaction levels as opposed to construction activity, such as REA, should benefit earlier.”