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June 30 reporting season wrap-up and global market outlook

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2023-08-28

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As the June 30 reporting season draws to a close, roughly 15% of ASX 200 companies are yet to release their reports, primarily comprising smaller enterprises.

Among the imminent releases are reports from notable entities including Fortescue Metals, Mineral Resources, IGO, Brambles, and Harvey Norman. Brambles and IGO's reports are expected to be positive, while FMG and Harvey Norman are projected to display lower figures due to revised guidance and other data adjustments.

The June half earnings reporting season is nearly 85% complete in terms of companies and 92% complete in terms of market capitalization. Shane Oliver, Chief Economist at AMP, comments that the season has surpassed dire expectations but still witnesses downward revisions in response to cautious corporate guidance.

Regarding surprises, both positive and negative have been balanced, with approximately 36% beating expectations and 37% falling short. Oliver notes that cost pressures persist, although some signs of relief are visible. Building material companies benefit from robust activity, yet warnings of a slowdown have emerged. Insurers experience improved margins at the cost of customers facing substantial premium hikes.

Home borrowers continue to meet their payments, although pending rate hikes may impact this trend. Corporate guidance leans cautious, with more negative than positive outlooks. Retailers, in particular, predict tougher conditions and anticipate customers to seek bargains from discount stores like Big W and K Mart.

Guidance-influenced consensus earnings expectations have been adjusted downwards since the start of the reporting season. Projections now suggest a 1.8% rise in earnings for 2022-23 and a 5.4% decline in 2023-24, contrasting with prior estimates of 2.5% growth and 0.8% decline respectively.

Within the reporting season, 27% of companies have lowered dividends (thus far), up from 21% in the half-year ending on December 31, but consistent with the same period in August 2022.

The upcoming week in the US presents significant quarterly releases, including HP Inc., Hewlett Packard, VMware, J. Smucker, Hormel Foods, and Dell. Notably, consumer electronics retailer Best Buy and grog company Brown-Forman are anticipated to report, alongside Chip group Broadcom and Salesforce.

Campbell Soup's figures will be watched closely, as analysts assess the impact of consumer preferences for more economical products in supermarkets. Meanwhile, UBS, the rescuer of Swiss rival Credit Suisse, may update on cost-related matters.

French group Pernod Ricard's report is anticipated, as is Delivery Hero's, marked by a 22% share value decline this year, reflecting skepticism surrounding the ongoing home delivery trend.

China enters a flurry of results releases, encompassing thousands of companies, including banks such as Bank of China and Agricultural Bank of China, and car groups led by BYD, SAIC, and Great Wall. Notably, Ping An Insurance, a major shareholder of HSBC, will report. China Vanke's report is especially significant, providing insights into the troubled Chinese property sector following China Evergrande's collapse and Country Garden's woes.

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