The stalemate in the Middle East conflict and growing expectations for another Reserve Bank interest rate hike set a bearish tone for the Australian sharemarket ahead of one of the busiest weeks of the year for local corporate earnings reports.
S&P/ASX 200 Index futures point to a 0.4 per cent drop at Monday’s open, extending last week’s losses after more companies missed profit expectations than beat them last week.
Traders are bracing for the trend to continue, with bourse heavyweights including BHP, CSL, and National Australia Bank all set to report next week.
Emanuel Datt, chief investment officer at Datt Capital, said that while the local sharemarket overall maintained an “upward bias” which pushed it to record highs less than a fortnight ago, earnings season was dividing the market.
Stocks with exposure to downtrodden consumers or the soft real estate market were particularly at risk, he added.
“Retail names seem to be downgrading [forward earnings] guidance or softening their language around guidance,” he said, citing Treasury Wine Estates and Endeavour Group as examples.
Both alcoholic beverage companies have posted large profit drops in recent weeks, with investors set to get a peak under the hood this week at other listed retailers including JB Hi-Fi and Super Retail Group.
Tuesday will also bring the latest Westpac/Melbourne Institute consumer sentiment index, which the bank’s economists said could show the housing market downturn and expiry of the fuel excise discount weighing on households.
Beyond individual company results, the RBA’s next moves are also weighing on market sentiment. While the central bank held rates as expected last Tuesday, governor Michele Bullock’s hawkish press conference stoked concerns that a fourth increase in borrowing costs remained firmly on the cards this year, even as the housing market downturn deepens across the country.
Source: https://www.afr.com/markets/equity-markets/middle-east-rba-cast-cloud-over-sharemarket-ahead-of-earnings-rush-20260816-p60ops