In its latest market commentary, head of portfolio management – Australia, active quantitative equities, Bruce Apted, said that the global reporting season is “largely complete” with many earnings records being broken.
“The percentage change in earnings and sales are some of the largest percentage changes we have seen,” Mr Apted said.
“Many sectors, especially the more cyclical sectors that were the most negatively impacted by the Covid-19 pandemic, have generated triple digit earnings growth year on year to 30 June 2021.
“The Australian reporting season is producing some very positive improvements in earnings, dividends and capital over the last 12 months.”
However, Mr Apted said that the record-breaking year-on-year earnings results will “set the market up for disappointment”.
“Many corporates have produced great results to 30 June but looking out to the next 12 months are uncertain about the impact of the lockdowns on sales and earnings and are providing less guidance,” he said.
“We have likely seen peak earnings growth which has already been accompanied by above average returns.
“Looking forward we see positive earnings growth but at lower rates that is likely to be accompanied by lower but still positive rates of return.
“The Australian reporting season so far has echoed the global reporting season in that much of the positive news is in the price, and looking forward we see greater uncertainty.”
Neil Griffiths
Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.
Neil is also the host of the ifa show podcast.
