All consuming
Recent economic data and commentary during earnings season both suggest the Australian consumer is bouncing back. That has big implications for the economy, and financial markets.
Has the Australian economy reached a turning point? That's one of the questions being asked in market circles this week after better than expected GDP data dovetailed with upbeat commentary from companies exposed to the consumer during earnings season. While it's too early to get carried away about either, both point to an economy in better shape that many had feared, and close to being able to stand on its own two feet again.
As we have documented extensively at Capital Brief over the past few weeks, results season was a decidedly mixed affair this year. While earnings across the market were, according to some estimations, broadly better than expected (Macquarie says 33% of ASX 300 industrials beat expectations, while 22% missed) there were stomach churning declines for some of the bluest of blue chip names on the ASX, and pain for US exposed companies.
Yet there were brighter developments in the consumer discretionary sector. Several prominent consumer names, including Lovisa, Super Retail, Eagers Automotive and Harvey Norman, posted double-digit share price gains following their stronger than expected results, which they have since maintained.
"Tax cuts are starting to flow. Energy relief, to an extent, is helping. There’s modest signs of a pick up," Morningstar equity market strategist Lochlan Halloway told Hugo Mathers and Brandon How in an earnings wrap we ran earlier this week. The RBA’s interest rate cuts in February and May also contributed.
