Mixed signals
There are conflicting messages in this week's earnings and employment data — not the best news for those betting on a rate cut this year.
Large cap company earnings are painting a complicated picture of the Australian economy. And that dovetails with the latest economic data, which has also been patchy and will provide little succour to those hanging out for an interest rate cut this year.
Today was the heaviest day for earnings so far this reporting season with a swathe of results from Australian corporate giants. You can tell they were mixed by the disparate moves in share prices with Telstra (up 2.6%) Cochlear (down 7.3%) and Origin Energy (down 10%) among the highlights — or lowlights.
Telstra’s result met expectations and the company’s decision to raise its cherished dividend pleased the market. And the solid growth in its mobile business reflects the broader economic resilience in the community. For a company with over 10 million customers, the fact that 29,000 of them required payment assistance is not overly concerning.
The market was also still digesting results from the biggest company on the exchange, Commonwealth Bank, which reported a $9.8 billion cash profit on Wednesday. As the main bank for more Australians than any other, CBA is as good a proxy as any for gauging the state of the real economy up to 30 June. The company met or exceeded expectations on several metrics, but notably, it saw little evidence of pronounced economic distress.
