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Key points:
Challenging Australian macro backdrop and geopolitics set up a tough reporting season Preference for US dollar earners and BHP (ASX:BHP) as a default copper/AI exposure Healthcare and select tech, including CSL (ASX:CSL) and Megaport (ASX:MP1), seen as opportunities Consumer sector approached cautiously, with emphasis on large-cap staples and quality retailers
Australia’s sharemarket heads into a “crucial” August reporting season lacking a clear catalyst to rally, according to Karen Jorritsma from RBC Capital Markets. Jorritsma views the backdrop of elevated rates, persistent inflation concerns, a tougher government policy setting and escalating Middle East tensions as a challenging mix for equities, with corporates likely to struggle to provide confident guidance. She expects “pedestrian” earnings growth and heightened focus on outlook statements.
In this environment, Jorritsma favours US dollar earners and offshore-exposed names, highlighting Aristocrat Leisure (ASX:ALL) and Light & Wonder as beneficiaries of currency tailwinds and US economic strength. Among resources, she sees BHP (ASX:BHP) increasingly used as a liquid “default” exposure, doubling as a proxy for the copper and AI data centre thematic, while Rio Tinto (ASX:RIO) is, in her view, facing more near-term pressure and fewer catalysts.
Jorritsma is constructive on beaten-up healthcare, pointing to value and defensiveness in CSL (ASX:CSL), Cochlear (ASX:COH) and ResMed (ASX:RMD). In tech, she cites Megaport (ASX:MP1) as one of the clearest local AI plays, while WiseTech (ASX:WTC) remains attractive but complicated by ESG issues. On consumers, she remains cautious, preferring large, liquid staples such as Coles (ASX:COL), Woolworths (ASX:WOW) and Wesfarmers (ASX:WES), with selective interest in JB Hi-Fi (ASX:JBH) and Harvey Norman (ASX:HVN) at the right price.
