The barbells of the Australian market are miners and banks, comprising around 60% of the index. The resources and utilities sector benefited from strength in commodities, particularly copper, but with rising interest rates and tax changes driving declining house prices, combined with continuing geopolitical uncertainty, the major banks reported housing loan applications down around 15% in the June quarter.  The difficult economic backdrop was also evident in the subdued retail trading results reported by consumer-facing businesses. 

Companies undertaking significant resets, such as CSL, ANZ, Treasury Wine Estates and ASX, were among those where investors could see evidence of a credible change in trajectory. CSL led a significant bounce across the healthcare sector.

Balance sheets also emerged in reasonable shape, with dividends remaining resilient and announced buybacks reportedly reaching a record $4.4 billion. 

However, expectations for the year ahead have come down materially, with growth forecasts reportedly falling to around 8% from more than 12% just a month ago. Ord Minnett estimates roughly two-thirds of companies experienced outlook downgrades during the month. 

Rising wages, energy and fuel costs, cost overruns, higher financing costs and the need to increase investment all put pressure on margins. Consequently, investors are striving to find companies that offer genuine revenue growth, rather than relying on cost reduction and optimistic forecasts. 

In addition, the heightened volatility of recent reporting seasons persists, with Goldman Sachs data showing 58% of stocks moved by more than 5% on their reporting day.  That volatility is now entrenched, driven by the rise of index funds and event-driven trading strategies and the decline in active managers. 

There are signs that investors remain willing to support businesses with credible growth stories and strong fundamentals. For example, the recently listed FDC is trading well above its $3.00 listing price following its maiden FY26 result and reaffirmed FY27 outlook. 

All of this means that investor presentations, management commentary and forward guidance all need to work much harder together. The companies that communicate most effectively will be those that can turn a set of financial numbers into a clear, credible investment narrative, particularly when the market is challenging the assumptions behind it.