What to expect from the Australian earnings season What to expect from the Australian earnings season What to expect from the Australian earnings season

What to expect from the Australian earnings season

The Aussie benchmark index has outperformed other global markets year-to-date, benefiting from a weaker AUD (down around 5% against USD since January 1) and outflows from the APAC region amidst trade tension volatility given that the ASX is relatively inward-looking and domestically focused. 

The ASX is inching towards its  2007 highs, and has reclaimed its 10-year high but has yet to reclaim the 2007 peak of 6,828.71.

The healthcare index has been the year's clear outperformer followed closely by the energy sector, while financials and telecoms have struggled. The ASX has been rangebound for the past month with the index unable to sustain the 6,300 level; without strong earnings momentum we are unlikely to see a sustained breakout.

With earnings season having kicked off last week we are expecting a robust but restrained season with analysts expecting EPS growth of around 8% down from 11% in FY17. Domestic economic conditions, with stable unemployment and low interest rates, have been supportive for corporate Australia but not stellar. 

Current valuations limit upside potential and without very strong earnings momentum we are unlikely to see a sustained breakout on the ASX 200 index. Analyst consensus shows us that most companies are expected to meet guidance with the exception of telecommunications firms. 

Upside surprises are likely to come from companies that benefit from the weaker AUD, supportive commodity prices, and US-led growth. 

Key themes to watch

1. Banks are facing numerous headwinds as both revenue and expense trends are weaker. Higher wholesale funding costs as US interest rates rise, heightened regulation, and a slowing credit market (with the slide in house prices set to continue) will all put pressure on net interest margins and profits. The forward outlook is likely to be challenging as regulatory costs are likely to increase and the housing market continues to slow. The differentiating factor in forward outlooks for the big banks is likely to be the cost-cutting and restructuring plans that will reduce expenses moving forward. Commonwealth Bank is expected to report its first drop in annual profit in  nine years. 

2. Growth stocks have outperformed value stocks so far this year and stretched valuations set the bar high. As we have seen in the US with Facebook and Netflix, there is very little margin for error and growth stocks are priced to perfection so the onus to deliver is strong. For companies like Domino's, Cochlear, Bellamys, Afterpay, REA Group, Treasury Wine, Wisetech, and NextDC, if earnings miss expectations we could see sharp falls in the share prices. 

The interesting thing here will be whether high PE stocks will continue to be rewarded or whether we will start to see a rotation towards the long-overlooked value stocks. In this event, we could see this rotation continue towards the end of the year. However, caution must be exercised here as this rotation has had many false starts and value stocks have significantly underperformed growth stocks for the past 10 years. 

3. The current resources cycle has been supportive for miners and energy stocks with WTI crude oil up 15% ytd. Commodity prices have been supportive for miners like BHP and RIO and these stocks offer upside from buybacks and dividends. BHP have finalised the sale of its US shale assets to BP and management have been very vocal with respect to returning the proceeds to shareholders. A large buyback would increase EPS by 5-10%. Rising oil prices are likely to feature as a cost inflation headwind for miners throughout reporting season.

4. The US has been a clear outperformer on the global macro stage in terms of growth and record low unemployment. The fiscal stimulus has the US economy running on a sugar high and this, along with the currency exposure, is likely to present positive tailwinds for ASX stocks with US exposure. These include Aristocrat, Ansell, Resmed, Boral, Corporate Travel Management, Orora, and WorleyParsons.

5. We saw a boost in retail spending in June and strong consumer confidence which could buoy earnings for specialty retailers like Adairs and Noni B – especially as Amazon's arrival is unlikely to have had a real impact yet. However, given the slump in home prices and rising competition we are relatively cautious in the retail sector. Risk is likely to be centred around consumer discretionary stocks like Coca Cola, Domino's Pizza, and Harvey Norman.

6. In the infrastructure sector, federal and state government investments as well as growing demand for infrastructure in large cities should provide structural growth for companies like Wagner’s, Boral, and Transurban. Cleanaway waste management also looks set for an earnings beat or upgraded outlook as its Toxfree acquisition contributes to future growth. 

7. The Aussie market is a high dividend-yielding developed market, so as always dividends will be in focus for investors; 69% of companies that reported in February had increased dividends. This quarter, according to Bloomberg data, five times as many as many companies are likely to increase dividends from a year earlier. 

The Labour Party’s proposals to abolish concessions that allow dividend imputation credits to be refunded may encourage companies with hefty franking accounts to fast track capital management initiatives such as paying special dividends. 

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article


The Saxo Group entities each provide execution-only service, and access to analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Inspiration Disclaimer and (v) Notices applying to Trade Inspiration, Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular, no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Trading in financial instruments carries risk, and may not be suitable for you. Past performance is not indicative of future performance. Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/en-sg/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region


Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-sg/about-us/awards.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.