The health of the Australian December reporting period will be heavily influenced by the midweek interim earnings release by the local market’s second biggest company, the Commonwealth Bank.
The CBA leads around 50 ASX 200 companies in reporting their December balance data figures this week. Other major corporates due to report include Telstra, CSL, Newcrest, Fortescue Metals and JB HiFi.
We have already a good idea how CSL and JB HiFi will go after earlier guidance, while Newcrest will attract attention because of the takeover approach from Newmont, its number one global gold mining rival.
Up till late last week the CBA’s shares had enjoyed a big rally in early 2023, hitting an all-time high of $111.43 on February 3 – it has since slid to $US109.95 by the close on Friday.
Investors have been more confident the bank will do better than expected. Over the past eight months, the banks, led by the CBA, have been the beneficiary of higher interest rates. Higher rates generally enable banks to increase their net interest margins.
And as the country’s biggest bank, it should be in a prime spot to take advantage of the higher rates and the boom in home loan refinancing.
But last week saw the enthusiasm ease a little which left the shares down 1.08% for the week, which in turn trimmed the 2023 rally to a still solid 7.1%.
The CBA earned a cash profit of $2.5 billion for the September quarter. That puts it well on the way to topping the $4.75 billion reported for the December, 2021 half year when an interim dividend of $1.75 was declared.
Some analysts think the bank will lift its interim back to $2 a share which was the rate pre-pandemic.
Other stocks to report include JB HiFi and Lendlease (today). Tomorrow sees Aurizon, CSL, Challenger, Seven West Media, IAG, Beach Energy, Ansell, Computershare, Dexus, James Hardie (9 months), Temple & Webster and Breville.
Wednesday sees the CBA report, along with those from Fortescue, Seven Group, Vicinity Centres, Cochlear, TWE, GUD, GWA, Fletcher Building and Wesfarmers.
Thursday its the turn of ASX, AMP, Sonic, South32, Orora, Bapcor, Super Retail, Goodman Group, Sonic Healthcare, Origin Energy, Newcrest, Whitehaven Coal, Evolution and Telstra. Friday its Baby Bunting, QBE, Latitude and Inghams.
Friday’s weak December quarter report and 1,250 in job cuts from News Corp couldn’t stop the US quoted shares losing fell 9.4%. The ASX quoted securities were down nearly 7% on Friday.
According to the AMP’s Shane Oliver consensus Australian “earnings expectations for 2022-23 are for growth of 7.7%, but this is concentrated in energy, industrials, IT and utility stocks. Expect companies to generally confirm that cost and supply chain pressures have eased somewhat from last year.”
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In the US, December quarter reporting continues this week with another 70 S&P 500 companies due to release their figures.
So far this year, analysts have cut their expectations for S&P 500 companies’ first-quarter earnings by 4.5%, according to strategists at Credit Suisse. That’s a deeper cut than average.
A Goldman Sachs basket of unprofitable tech stocks that fell over 60% in 2022 has rebounded 21% so far in 2023, dwarfing the S&P 500’s 6.5 percent gain. Meta, Netflix and Apple shares have all gained strongly since their quarterlies.
Meta is up 45% so far this year, while Netflix is up almost 18%. Those stocks fell 64% and 51% last year, respectively. Apple shares are up 16 % this year- they fell more than 20% last year.
Some of the US and global majors reporting this week include Cisco, Coca Cola, Barclays, Deere and Co, Nestle, Allianz, Swiss Re, Pernod Ricard, Marriott, Kirin, Commerzbank, Kraft Heinz, Singapore Airlines, Daimler and Airbnb.
And there’s a group of some of the world’s biggest miners also reporting – Glencore, Vale, Agnico Eagle, Albemarle, Livent, South32, Yamana Gold, Newcrest, Kinross Gold and Barrick Gold.
