Australia’s reporting season has seen significant market volatility, with several large companies experiencing sharp share price declines after failing to meet investor expectations. James Hardie, CSL, and Commonwealth Bank have been among the hardest hit, collectively wiping billions of dollars off the sharemarket. According to Ten Cap portfolio manager Jun Bei Liu, the market is reacting more severely to earnings misses, resulting in double-digit percentage drops for underperforming companies.
James Hardie, a building materials company, saw its shares plummet nearly 30 per cent after it lowered its full-year earnings outlook due to a slowdown in the US housing market. Net income for the company fell 60 per cent to $US62 million in the three months to June. Healthcare giant CSL, a global biotechnology leader that researches, develops, manufactures, and markets a range of products derived from plasma as well as recombinant cell-line technology, suffered its largest one-day fall ever, with shares dropping nearly 17 per cent and wiping over $20 billion from its market capitalisation, after announcing plans to cut 3000 jobs and spin off its vaccine business.
Commonwealth Bank also faced pressure, falling 5.4 per cent despite reporting a $10.25 billion cash profit. Investors were unimpressed, with the shares already trading at a high price-to-earnings ratio. However, it hasn’t been all negative, with some companies like Life360, a family safety platform, Pro Medicus, a medical imaging software group, and Baby Bunting, a nursery retailer, bucking the trend with positive market reactions to their reports.
CMC Markets Australia head of premium clients Fraser Allan noted the swift volatility in traditionally defensive stocks like CBA and CSL. Atlas Funds Management chief investment officer Hugh Dive highlighted that companies meeting expectations were generally rewarded, while those falling short faced significant consequences, adding AGL Energy to the list of companies that saw significant share price decline. Seek and Lendlease were named among the major winners, while JB Hi-Fi has rebounded following an initial drop.
