Stock market expectations for this earning season

By Dale Gillham. Published at Aug 2, 2019, in Market Wrap

The results are in as reporting season takes off in earnest with its first full week. The much anticipated earnings season is critical to understanding the direction of the market over the next 12 months, and could not have come at a more interesting time with the Australian market recently hitting a new all-time high.

So will reporting season be a big winner for investors or a warning sign of things to come?

What to expect this earnings season?

Analysts and investors look at reporting season with anticipation and sometimes trepidation because it brings with it heightened market volatility. Given that we are only one week into reporting season, volatility has been quite low, with the market only slightly lower than last week.

Hedge funds will often take advantage of reporting season and increase volatility by selling stocks that do not meet market expectations to make some quick profits. Many superannuation and index funds also rebalance their portfolios around this time, which adds to market volatility. And as some of the bigger companies are yet to report earnings, there will be quite a lot of noise in the market as analysts breakdown the results.

As I have mentioned many times previously, it is wise for investors not to react to the volatility but rather to wait for the dust to settle. Unfortunately, too many investors get caught up reading reports and market news, only to speculate on the direction of the stocks they hold, with many getting it wrong. This ultimately leads to buying stocks too early or getting out of good companies, which rise after the dust has settled.

Rather than focusing on earnings season, it is more beneficial for investors to look at the bigger picture and to start preparing to make the most of the upcoming opportunities in the market.

Companies reporting this week

Despite positive full-year earnings, Credit Corp was sold off heavily over the past week due to flat earnings and its dividend outlook. The company reported revenue of $324 million and a 9 per cent increase in net profit after tax.

While Credit Corp was down nearly 9 per cent early in the week due to an overreaction to the news, it recovered nicely, which is why I say investors should wait until the dust settles before making any decisions during reporting season.

Rio Tinto has been down nearly 10 per cent since May before reporting this week with the news positive for the miner. It clearly topped the forecasts, as it announced that not only were sales revenue and earnings up strongly but it would also lift its interim dividend up to US$1.51 a share and pay a special dividend of $0.63 cents a share.

While Rio’s share price increased on this news, once again I caution investors not to over react, as this great result has come on the back of increased iron ore prices after the Vale dam collapse, and as we know Vale has announced it will resume production soon.

Transurban, CBA, Suncorp, AMP, AGL, Mirvac and IAG all report next week. AMP is at its lowest price in history and CBA, Sun, and AGL have been struggling over the past couple of months, so next week should be interesting.

Communication Services was the best performing sector up over 2 per cent followed by Industrials up over 1 per cent. Materials was down just over 1 per cent closely followed by Information Technology, which was also down for the week.

As for the stocks in the ASX top 200, IPH has so far topped the list up over 8.5 per cent, while Orica was up over 7 per cent following positive news from its investor day this week. Vocus Group was also up over 5 per cent, which could be the dark horse for the month for those willing to tackle the wild ride this stock has been on over the past few months given that it has recently been a takeover target.

The worst performers include ABC, down over 20 per cent on profit downgrades followed by CYBG, which was down over 18 percent and Janus Henderson Group down around 15 per cent.

So what do we expect in the market?

While the medium to long term outlook for the Australian market is bullish, over the short term I expect it will move down around 8 to 15 per cent from its high by early October. It is possible that the high this week of 6,958 points is the all-time high before the market falls away, although I believe it is more likely that the market will rise for another two to four weeks up to around 7,200 points before falling into a low.

Anyone buying right now should do so with the expectation that you are buying for the short term. If you decide to hold your positions, you need to expect that some of the stocks in your portfolio will move down while the market pulls back. For now, stay calm and keep investing in good Australian stocks.

Dale Gillham is Chief Analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also author of Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in book stores and online at

Where to invest $1,000 right now

When the experts at Next Investors have a stock pick, it may pay to listen.

The Next Investors have been investing in ASX small cap stocks for years, with their best small cap picks yielding returns of 1,200%, 1,120%, 900% and 678%.

They have just revealed their hand-picked, FY2021 stock portfolio of high conviction long-term investments.

Click the link below to see what they are currently investing in.


S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

Publishers Notice

The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.

Australian ASX Small Cap stocks | Why is Australia’s leading small cap publication

Founded seven years ago, is Australia’s leading and longest standing website for investor and finance news, education and expert opinion.

Published by StocksDigital, Finfeed was created to report daily on the comings and goings of ASX listed stocks in the small cap market.

As the first digital publication dedicated specifically to this space, Finfeed soon became the most trusted publication in the market, quickly garnering over two million page views – a number that continues to rise. provides its readers with informative articles that tackle the latest in market moving #ASX small cap news, plus exclusive content you won’t find anywhere else. It is aimed at those with an interest in investing, market education, company performance, start-ups and much more. is the only media organisation operating under the strength of a Financial Services License and is backed by leading journalists and analysts all with brands of their own.

The website aims to inform, educate and entertain with content that drills down into the heart of financial matters.

Finfeed is a leading source of investor and market information, with everything investors need to know about how to invest written in a way that anyone can understand. 

Over the years, the website has expanded beyond exclusively reporting on small caps, to profile Australia’s leading ASX listed small, mid and large caps as well as some of the country’s most successful CEOs and business leaders to find out what makes them tick.

Every day you will find fresh content covering:

Fast Facts

Over 4,000 articles published

Over 2.3 Million Page Views and counting

Over 10,000 followers on social media

Subscriber list growing by 2% monthly

Thanks for subscribing!