By Jason Fittler
down week on market last week with bad news in the financials, NAB
leading out ANZ following up and SUN with the king hit.
As we head into reporting season everyone is bracing for bad news, I do not think we will be disappointed. Companies will use this market as an opportunity to clear out all of their bad news. So what do we expect?
1. Financials – increase provisions in Bad debts, especially in domestic loans. Flat earnings and flat growth projections.
2. Resources – strong cash flows and excessive cash available, the big guys should outperform. Question is over future projections and what they will do with the funds?
3. Telecom – strong earnings in mobile and internet from Telstra, confirmation on income and dividends.
4. Retail – decline in earning projections and flat forward projections, I expect to see a decline especially in discretionary spending.
– higher than expected provisions in general insurance, flat earnings
and flat projected earnings. However, this should allow for premium
increases making this sector profitable in the longer term.
Other news this week in interest rates, I expect these to be left on hold for now. The housing sector has slowed and house prices are dropping. This along with a slowing in consumer spending would indicate that the recent rate raises are doing their job. I do not however rule out future rate raises.