Transcript:

Hello, I’m Lochlan Halloway, Australian Equity Market Strategist at Morningstar. And welcome to the Morningstar Market Minute, a video series where we explore markets, and the economy, every Friday lunchtime.

This week, ASX reporting season is in focus.

So far, results have been fairly solid. Our analysts have upgraded about 40% of companies, and we’ve made very few downgrades. The market is up about 2% from the start of August, which is better than average for this point in reporting season.

But it hasn’t all been smooth sailing. Blue-chip stocks CSL (ASX:CSL) and James Hardie (ASX:JHX) both saw brutal selloffs this week. For CSL, softer plasma guidance and a big restructure spooked investors. And for James Hardie, it was a sharp miss in US housing volumes. In both cases, our equity analysts think the market reaction is overdone, and this selloff opens a rare window of opportunity for two high quality businesses.

Outside of company earnings, the main domestic data point this week was consumer sentiment—and it jumped sharply, as last week’s RBA rate cut flowed through to confidence. That’s a welcome sign for the Australian economy.

It also bodes well for consumer stocks. Retailers have endured a long winter, with weak sales growth struggling to keep pace with cost inflation. The positive sentiment update, alongside some robust trading updates from reporting season, suggests that winter is starting to thaw.

Looking abroad, the market anxiously awaits Fed Chair Powell’s remarks tonight at the Jackson Hole Symposium. Speculation is rife on whether he leans dovish or hawkish—or even addresses the long-running tension with President Trump.

What we do know is that the US economic data flow is softening, particularly in the labour market. Interest rate futures now price an 85% chance of a Fed cut in September, and our economists agree that’s the most likely outcome.

That’s all for this week. Please join me next Friday as we cover off the final stretch of reporting season—plenty of big results still to come.