The Australian December half earnings reporting season steps up this week with 23 major companies reporting.
The AMP’s Dr Shane Oliver says earnings are now expected to rebound in 2020-21 by 25% after the pandemic driven 24% slump last financial year.
He thinks the standout sectors will be resources where are expected to rise by 47% (thanks to BHP, Rio Tinto and Fortescue), banks by 31% (share prices are now reflecting that with the Commonwealth reporting on Wednesday) and IT stocks by 109%.
Retailers will also do well, though the gains are already in the share prices after a series of strong updates in December and January.
Furniture chain Nick Scali saw a big jump in sales and a 100% rise in profit and a 60% jump in interim dividend. JB Hi Fi, Mosaic Brands and Super retail Group have already outlined stellar December quarter or half year results. Solid updates have come from Beacon Lighting group, Eagers, The Shaver Shop, Premier Investments and Accent group.
Besides the CBA, others to report this week include: Shopping Centres of Australia, Argo Investments (Monday), Suncorp, Boral, Challenger and Dexus (Tuesday); CBA, and IAG (Wednesday); AGL, AMP, ASX, Newcrest, Transurban and Telstra (Thursday); and Mirvac and Computershare (Friday).
“Healthcare, media and gaming stocks are likely to see around 17% earnings growth and retailers are likely to surprise on the upside,” Dr Oliver wrote.
“Key themes are likely to be a rebound in dividends, stocks benefiting from a surge in housing activity and a likely outperformance of value and cyclicals over growth stocks, and small caps outperforming large caps,” he said.
Also in Australia, there’s the NAB business survey for January (tomorrow) which is likely to show continuing strength in business conditions and a rebound in confidence as the late December early January COVID scare eased. Consumer confidence (Wednesday) is likely to have remained strong.
In the US, headline CPI inflation for January (Wednesday) is likely to have increased further to 1.5% year on year reflecting the rise in energy prices but core CPI inflation is likely to edge down to 1.5%yoy from 1.6%, according to Dr Oliver.
Data for small business optimism and job openings (Tuesday) will also be released and the December quarter earnings reporting season will continue (See separate story).
Chinese inflation data for January (on Wednesday) is expected to show a -0.2%yoy drop in the CPI, but a rise in producer price inflation to +0.3%yoy.
There’s no trade data next week for January, so the Chinese government will follow normal practice to combine the January and February trade data into one report and release it in March and do the same for industrial production, retail sales and urban investments for both months.
The justification for this is to smooth out the distortions caused by the week long Lunar new Year holiday starting this week from February 11 (New Year’s Eve).
