Australia’s February reporting season has exceeded expectations, propelling the market to record highs, according to UBS strategist Richard Schellbach. This performance occurred even as global sentiment leaned towards potential sell-offs. The S&P/ASX 200 has demonstrated resilience, driven by strong corporate earnings and positive guidance.
Earnings beats outnumbered misses by a ratio of 2:1, while guidance upgrades surpassed downgrades at a rate of 3:1. This has led to an increase in the S&P/ASX 200’s fiscal year 2026 earnings growth forecast to 13.6 per cent year-on-year, a significant rise from the 11.3 per cent projected last month.
Despite elevated volatility, with a dozen ASX100 companies experiencing share price movements exceeding 10 per cent on their reporting day, UBS suggests this creates opportunities for active stock pickers. They point to low correlations and wide return dispersion as factors favouring strategic investment decisions. Schellbach also noted that investments in artificial intelligence by major companies like CBA, Telstra, Breville and Woolworths are beginning to translate into measurable productivity gains and profit increases.
UBS has revised its year-end target for the ASX200 upwards to 9400 from 8900, citing strong results and ongoing earnings upgrades that have alleviated valuation concerns. Economists anticipate limited impact from potential future RBA rate hikes on company profits. Commonwealth Bank (CBA) is a financial services provider, while Telstra provides telecommunications and information services.
