FNArena’s Weekly Insights – February 15 2023
This story features AUDINATE GROUP LIMITED, and other companies. For more info SHARE ANALYSIS: AD8
In this week’s Weekly Insights:
-February: Focus On Resilience & Dividends
-February Results Thus Far
-Corporate Australia Showing Resilience
-Commodities – Lithium & Dividends
-Consumer & Gaming Stocks
-Advertising & Media
-Insurers
-Research To Download: Edison Research
-Research To Download: Research as a service (RaaS)
February: Focus On Resilience & Dividends
By Rudi Filapek-Vandyck, Editor
Financial markets are supposed to be forward-looking.
This is where the ambiguity begins, and the difficulty to understand what is happening, and why.
Those among us who have been watching markets for a long while know the supposed forward-looking dynamic is far from perfect. Whether it works or not is mostly dependent on from which starting point our observation begins.
Global equities have rallied hard since September last year, but equities have, effectively, front-run corporate earnings and fundamentals. This need not be a problem as fundamentals can catch up, assuming this is what happens next.
The problem with this bullish view is that economies are slowing, and they are almost guaranteed to continue slowing as the year progresses. Central banks are still hiking rates and the real impact from last year’s tightening hasn’t fully impacted just yet.
Hence, it’s not difficult to see why so many observers and market watchers are skeptical whether indices can hold on to their gains. Corporate profits are under pressure because economic momentum is deflating, but also because cost inflation is still very much a negative feature.
If we stick to the positive thesis, history shows share prices start anticipating the trough in earnings well before that trough is in place. This forward-looking dynamic is shown in the graphic below (courtesy of Janus Henderson).
