Market set to defy trends as top companies report results
Markets are expected to defy trends this week, with some of the nation’s largest companies due to report good results.
Australian financial markets are expected to defy trends this week, with some of the country’s largest companies due to report good financial-year results, led by Qantas, Woolworths and Wesfarmers.
US stocks edged lower on Friday, led by declines in utility shares as investors weighed prospects for an interest rate increase in coming months.
The S&P utility index, which tends to fall as investor rate-hike expectations rise, ended down 1.2 per cent.
AMP Capital’s chief economist Shane Oliver said the moves on Wall Street were relatively modest and the US market managed to claw back heavier losses earlier on Friday.
“We’re looking at a fall at the open, in line with the US sharemarket fall. My best guess is four or five points down at the open,” Dr Oliver said.
He added the week ahead would be the busiest of the reporting season, with 87 major companies to post their results.
“I think the results will be OK, but not fantastic. That’s the story from the whole reporting season really: that profits are down but maybe not as much as expected,” he said.
Major retailers including Woolworths and David Jones are due to report on Thursday.
“There has been positive retail growth in the economy, business conditions have been OK, but the retailing environment is very competitive at the moment and pricing power is lacking,” Dr Oliver said. “Consumers are still very discerning and still on the lookout for a bargain.”
Dr Oliver said the Woolworths result would be interesting in the face of stiff competition from Coles and Aldi.
Little economic data is due out this week, but the ABS will release its figures for construction work in the June quarter on Wednesday. “That’s expected to be negative,” Dr Oliver said.
“The consensus is for a 2 per cent fall in June quarter activity. The big drag there is engineering or mining-related construction offsetting strength in housing construction.”
ADDITIONAL REPORTING: AAP
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