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ASX Live Update: August 26, 2023
Welcome to our live coverage of the ASX for Tuesday, August 26. We’re piloting a new format for our updates, featuring a high frequency of posts in the pre-market phase, followed by periodic updates throughout the day. Join us until approximately 2:00 PM AEST, and remember to refresh the page to catch the latest developments. We encourage feedback to enhance your experience, so feel free to share your thoughts via our survey.
Summary of US Q2 Earnings Season
As the Q2 earnings season nears its conclusion, several notable tech and retail stocks are set to announce their results in the final week of August. The overall performance has been notably robust, marked by the following key highlights:
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Earnings Growth: The blended growth rate stands at +11.7%, outperforming the initial expectation of +4.9% for the quarter. An impressive 82% of companies surpassed earnings per share (EPS) estimates, significantly exceeding the one-year average of 77%. The average beat magnitude has been measured at about 8%, compared to the historical norm of 6.3%.
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Guidance Trends: A noteworthy 58% of companies have raised their full-year 2025 guidance, a figure that is double that of Q1, indicating widespread corporate confidence.
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Earnings Revisions: Analyst estimates for the latter half of the year and into 2026 are trending upward across many sectors.
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Revenue Insights: In the S&P 500, 44% of firms have upgraded Q3 revenue guidance, the strongest performance since Q3 2021. Conversely, just 14% have lowered their revenue outlook, tying this quarter for the lowest record of reductions according to Jefferies.
- Positive Revision Breadth: Both the S&P 500 and small-cap earnings have shown positive revision breadth, reflecting enhanced sentiment beyond merely large-cap companies.
Current Market Landscape
Currently, market activity is being influenced by several key factors:
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Federal Reserve Outlook: With Fed Chairman Powell’s dovish stance, markets are pricing in an 85% probability of a rate cut in September and expectations of approximately 54 basis points of easing by 2025. However, concerns persist due to tariff-related inflation, weakening labour data, and political pressures.
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Market Dynamics: Increasing breadth driven by easing expectations is fostering sector rotations, although there remains a heavy reliance on mega-cap stocks which continues to weigh on the overall index.
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Artificial Intelligence (AI) Impact: The AI sector remains a primary sentiment driver, despite growing scrutiny related to potential capital expenditure "bubbles," intensifying competition, and unpredictable monetisation pathways.
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Earnings Environment: Positive trends in guidance, revised estimates, and strong share buyback activity are supportive factors, counterbalancing seasonal challenges and elevated positioning in the tech sector.
- Global Influences: Various global factors, including the Bank of Japan’s hawkish stance, policy stimulus in China, a rebound in the stock market, and notable mergers and acquisitions activity, as well as a slowdown in private equity fundraising, are adding layers of macro and micro volatility.
Morning Market Overview
The ASX 200 futures have opened down by 19 points (0.21%). Major US indices performed poorly overnight, with the S&P 500 declining by 0.43%. The local market displayed weak performance on Monday, with the ASX 200 ending the day marginally up by 0.06%, retreating from session highs of 0.97%.
For those who are new to our updates, we invite you to catch up on this morning’s activities through our latest brief.
