Australia’s earnings season has been marked by exceptional volatility, with share price swings reaching levels not observed in recent years, according to Morningstar equity strategist Lochlan Halloway. Results for 151 companies under coverage reveal that fair values were raised for 44 per cent of stocks, slightly surpassing seasonal averages as of August 27. However, downgrades also increased, climbing to 14 per cent from 9 per cent the previous week.
Halloway noted a significant spike in volatility during the last week, with the standard deviation of price changes on results day exceeding 10 per cent. He highlighted several notable shocks, including CSL, a global biotechnology company that researches, develops, manufactures, and markets a range of products derived from human plasma and recombinant technology, which experienced its worst day since listing with a 30 per cent plunge. James Hardie, a manufacturer of fibre cement siding and backerboard products, fell 17 per cent, and Woolworths saw its heaviest selloff since 1994, dropping 15 per cent.
These dramatic movements, Halloway suggests, are driven partly by disappointing results and cuts to company guidance, but are amplified by the influence of passive and algorithmic trading strategies. He pointed to James Hardie as an example, where a deterioration in US housing volumes and a subsequent guidance cut led the market to slash its fiscal 2026 earnings forecast by 40 per cent just three months into the year.
Halloway added that market sentiment can be unpredictable and unforgiving, stating, “Woolworths might be out of favour today, but it looks like much better value (than Coles). All investors need to do is assume it won’t lag its closest competitor forever, and that seems a sound bet to us.”
