Reporting season kicks off next week, and investors across Australia will be glued to earnings, profit margins and guidance. But here’s the catch: this could be one of the most misleading reporting seasons in years.
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Over six months, we’ve seen almost every major market driver shift. Oil prices surged on escalating tensions in the Middle East before pulling back.
After hitting record highs, gold and silver have corrected sharply as investors rotated back into risk assets and expectations around rates changed. Copper has stayed resilient thanks to demand from AI infrastructure and electrification, while inflation, interest rates and government policy continue to shape the outlook.
The obvious winners should be Materials and Energy. Higher commodity prices are expected to boost earnings, particularly for miners and energy producers. The key won’t be the results themselves, but what management says about the road ahead.
Consumer staples such as Coles and Woolworths will also be worth watching. Rising transport and operating costs have squeezed margins, but both companies have shown they can pass many of those costs. With both stocks in long-term uptrends, investors clearly still view them as reliable defensive plays.
Healthcare, Technology and Real Estate could tell a different story. Many companies in these sectors have already seen their share prices retreat over the past year. If the market has already priced in weaker earnings, even average results could be enough to spark a rally.
That brings me to what I believe is the wildcard sector this reporting season: Financials. Australia’s banks have spent months battling concerns around slowing credit growth, softer consumer spending and pressure on lending margins. But what if the bad news is already factored into their share prices? If results come in even slightly better than expected, the sector could quietly surprise investors.
My wildcard stock is South32 (ASX:S32). While everyone focuses on the big iron ore names, South32’s exposure to copper and other base metals gives it a unique position if industrial demand continues to strengthen.
Good luck and good trading.
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Dale Gillham is Chief Analyst at Wealth Within and an international bestselling author of How to Beat the Managed Funds by 20%. He is also the author of Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in bookstores and online at www.wealthwithin.com.au.
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