Josh Gilbert, market analyst at eToro, shares his three things to watch in Australia in the coming days.
AU reports
The bumper Aussie reporting season continues with some particularly notable names clocking in results this week, including WiseTech Global Ltd, Megaport Ltd, Whitehaven Coal Ltd, Santos Ltd, Telix Pharmaceuticals Ltd and Domino’s Pizza Enterprises Ltd.
In particular, Santos represents an exciting prospect for investors, given it has two significant growth projects underway and stock prices for the oil and gas giant continue to look comparatively cheap.
Whitehaven Coal’s results are likely to be a bit more muted, with the earnings from coal operations it purchased from BHP Group Ltd and Mitsubishi earlier this year used to pay transaction costs that had been previously deferred during the acquisition process.
Telix Pharmaceuticals is a bit of an undersung stock darling, having risen almost 90% in the year-to-date. Recent regulatory setbacks may lead to slightly underwhelming results for this quarter, however, as the company has been struggling to secure US FDA approval for one of its key products, leading to multiple delays in product rollout. Regardless, the stock continues to reward patient investors and slight shortcomings likely won’t be enough to cause a sell-off.
Domino’s Pizza has had a terrible year so far, kicking off with the share price experiencing a record drop in January after it withdrew its fiscal 2024 outlook in response to poor network sales across Asia and Europe.
We’re a long way away from the pizza empire’s 2021 share price high, and the company’s attempt to cut costs in order to stoke profit margins does not seem to have struck a chord with customers.
At the end of last week, Domino’s announced it is appointing current COO Kerri Hayman, who also happens to be CEO Don Meij’s sister, to run its Australian and NZ enterprise. Hayman has exceptional Domino’s experience – spanning almost 40 years – which will give investors confidence and hopefully lead to better fiscal outlooks but it’s unlikely we’ll see any of that magic in the earnings this time around.
RBA meeting minutes
The minutes for August’s RBA meeting, which are set to come out on Tuesday, will be of interest to many following Michelle Bullock’s comments stating that the Reserve Bank had seriously considered another rate hike this month just recently.
While it’s clear that investors need to accept the reality of higher for longer rates, Bullock’s appearance before the committee last Friday revealed an unsavoury reality for many: the board did not expect inflation to get back to the 2-3% target range until next year or possibly even into 2026.
This may be rubbing salt into the wound of many borrowers and investors who were already coming to terms with the fact that the board had already ruled out an interest rate cut in the next six months.
In Bullock’s own words, “high inflation hurts everyone” and there’s not expected to be much pain relief in the margins of these meeting minutes. It is likely to once again show that the RBA will keep its hawkish stance and that a cut by year end seems far too optimistic.
Jackson Hole Symposium
Federal Reserve chair Jerome Powell is expected to deliver an address next Friday at Jackson Hole in Wyoming. The countryside town is the location of the Kansas City Fed’s annual economic symposium, a three-day conference where the Fed chair’s address is regarded as one of the headline moments.
His speech is usually watched closely but Powell's remarks will probably be of extra interest, given that the central bank appears very close to lowering interest rates from their current two-decade high.
Employment rates are weaker than expected now in the US and inflation continues to ease in the region, meaning analysts won’t be looking to see if they’re cutting but an indicator of how much they’re likely to cut by. That said, those looking for actual details on whether it will be 25 or 50 basis points will have to wait until September’s Fed meeting proper.
America appears to slowly be solving its inflation problem and the UK has already begun cutting rates, which may represent a concern to Australians as our allies grow more economically optimistic while the prospect of interest rate cuts here continue to be pushed out past the horizon.