The COB: Friday Fizzle

Why It Matters

A stronger earnings backdrop and tight labour market boost Australian equities, but looming rate hikes and geopolitical oil risks could quickly reverse gains, making sector‑specific vigilance crucial.

Key Takeaways

• Reporting season nearing end, small‑cap earnings expected next week.
• Banks and miners drive market gains, other sectors lag behind.
• Majority of companies beat expectations, profit growth improves to ~30%.
• Australian jobs remain tight, wages rising, risk of rate hikes.
• Geopolitical tension with Iran could spike oil, affecting markets.

Summary

The COB Friday edition wrapped up the week’s market activity, noting a flat‑to‑slightly negative close as the ASX hovered just above the 9,000‑point mark. With one week left in the earnings season and a tail of small‑cap reports expected, host Andrew Gageen highlighted the “Friday fizzle” as a pause before the final reporting wave.

Bank stocks such as ANZ, Westpac and CBA led the upside, while materials were mixed after Rio Tinto’s 3% miss. Corporate results showed a broad earnings rebound: miners posted roughly 30% profit growth, dividend payouts rose for 66% of firms, and overall profit growth averaged 4%. Telix Pharmaceuticals surprised with a near‑$1 billion revenue forecast despite a net loss, lifting its shares 15%.

AMP’s Shane Oliver emphasized the shift from three years of declining profits to a turnaround, noting the best earnings‑expectation differential since 2021. He warned that the market’s rally rests heavily on banks and resources, and flagged high forward P/E ratios and potential RBA rate hikes as risks. Both analysts also speculated that Australia could benefit indirectly from the AI boom through increased demand for its natural resources.

Investors should monitor the upcoming small‑cap earnings, watch for any RBA policy moves triggered by a tight labour market, and stay alert to geopolitical developments that could drive oil volatility. The mixed sector performance suggests that while the headline profit story is positive, diversification and risk management remain essential.

Original Description

The S&P/ASX 200 gave back some gains after climbing to record highs earlier this week. On Friday, the index shed 0.05% to 9,081.40 points. But over the course of the week, the index rose 1.8%.

In the US, investors turned risk averse overnight, amid building US-Iran tensions, which saw equity markets fall. This sentiment weighed on the local tech sector, which fell 2.4% today.

Meanwhile, reporting season took its toll on Rio Tinto, lower by 3.3% on flat annual earnings for the year amid lower iron ore prices.

Shares in Guzman y Gomez hit a record low, after reporting softer than expected US sales.

Heading the other way, QBE Insurance gained 7.1% with investors reacting positively to a 21% increase in full-year net profit driven by improved investment returns, and lower disaster payouts.

And Telix Pharmaceuticals flagged over US$950 million in revenue for 2026, which lifted shares by 14.2%.

Next week, the inflation read will be under scrutiny following a stable jobs report on Thursday. On the corporate calendar; Woodside, Karoon, Coles and the ASX will hand down results.