Worried investors will pounce on weakness this AGM season

“Investors are laser-focused on the next round of updates to determine when the resilience since the start of the calendar year in recent data and trading gives way to a consensus expectation of weaker growth,” did he declare.

“There is a heightened level of impatience with what many see as an inevitable downturn in activity and a necessary adjustment to estimates and growth rates.”

As Australian stocks have been swept away by the selloff in global equity markets, strategists are warning that a sharp slowdown in corporate earnings is underway.

Consensus expectations indicate that earnings growth for the S&The P/ASX 200 will slow from around 23% in fiscal year 2022 to 5% in the current fiscal year.

Meanwhile, the benchmark’s 12-month forward price-to-earnings ratio fell to around 13x, coming back from a cyclical peak of nearly 19x.

Investors are expected to pay close attention to consumer-facing companies for signs that persistent inflation and rising interest rates are changing consumer habits.

Mr Nicol said the strong run of economic data since the August reporting season means companies are unlikely to admit to a broad-based decline in activity this AGM season.

“Any crack will be punished for sure, but perhaps the best test for consumer intent leading to [Christmas] will be Black Friday sales later in November,” he said.

The focus will also be on housing-related sectors, which Nicol said will be most stressed by the RBA’s aggressive policy tightening campaign.

This has caused house prices to decline at a record annualized rate and is exacerbated by weather, wage and labor supply issues, which are proving more persistent than expected.

“We will monitor any deterioration in the pipeline and forward sales as lower leverage capacity and tighter service assessments limit credit and risk appetite,” Nicol said.

The impact of the fall of the Australian dollar at the hands of the greenback will also be keenly observed, in particular for companies which will benefit from the rise of the US dollar. The Australian dollar is trading at a 2.5-year low.

“We sometimes overlook the impact on import coverage and input cost,” Nicol said.

“Big currency movements as we have seen will usually prompt commentary; we expect some clarity from the most exposed companies (both positive and negative) this season. »

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