Latest news with #Australian market
Yahoo
5 days ago
- Business
- Yahoo
Blue chip earnings ‘recession' continues
Australia's blue chip companies' profits are tipped to fall for a third year in a row, with investors warned that eventually 'something has to give'. In its latest investment note, Morningstar said the top end of the Australian market could be overvalued, with earnings not keeping up with share price growth. Morningstar predicts the ASX 200 'earnings recession' will continue with Australia's largest companies profits falling by one per cent in the 2025 financial year. This follows falls of 10 per cent in 2023 and four per cent last year. Morningstar market strategist Lochlan Halloway said while the other index continued to rise, Australia's largest businesses — from an earnings point of view — were actually falling. 'Eventually, something's got to give — either earnings catch up to lofty prices, or valuations rebase to reflect the reality of slower growth,' Mr Halloway said. 'This disconnect between prices and profits goes a long way to explaining why valuations look so stretched at the top end of the market. The warning comes as businesses are set to release their June 30 results throughout the month of August. According to Morningstar, the results could be bleak with the ASX 20 earnings tipped to fall by a cumulative 15 per cent in the three years until 2025. Despite the businesses themselves falling, share prices for the ASX 20 as a collective is up 30 per cent over the same period. By Morningstar's estimations, the ASX 20 is currently running at a premium of about 20 per cent compared to fair value — a level that has rarely been seen in the past decade. Mr Halloway said the main culprit would be the mining stocks, which would once again soften due to weaker commodity prices following the post-Covid boom. 'Financials, our largest sector, should deliver modest growth, but mid-single-digit gains aren't nearly enough to offset the miners' slump,' he said. The call comes as the Australian sharemarket pushed to a new record high over the past week, with markets ignoring tariff uncertainty and weaker local economic data. As of 3.30pm on Friday, the ASX was up 2.2 per cent for the week — its strongest gains since April 10. AMP chief economist and head of investment strategy said the Australian market jumped on the news of softer jobs data, which left the RBA on track to cut rates again in August. 'With unemployment breaking to its highest since the pandemic, and June jobs data showing broad-based weakness, it's now hard to describe the labour market as tight,' he wrote in an investment note.
News.com.au
5 days ago
- Business
- News.com.au
Australia's largest companies face another year of falling profits
Australia's blue chip companies' profits are tipped to fall for a third year in a row, with investors warned that eventually 'something has to give'. In its latest investment note, Morningstar said the top end of the Australian market could be overvalued, with earnings not keeping up with share price growth. Morningstar predicts the ASX 200 'earnings recession' will continue with Australia's largest companies profits falling by one per cent in the 2025 financial year. This follows falls of 10 per cent in 2023 and four per cent last year. Morningstar market strategist Lochlan Halloway said while the other index continued to rise, Australia's largest businesses — from an earnings point of view — were actually falling. 'Eventually, something's got to give — either earnings catch up to lofty prices, or valuations rebase to reflect the reality of slower growth,' Mr Halloway said. 'This disconnect between prices and profits goes a long way to explaining why valuations look so stretched at the top end of the market. The warning comes as businesses are set to release their June 30 results throughout the month of August. According to Morningstar, the results could be bleak with the ASX 20 earnings tipped to fall by a cumulative 15 per cent in the three years until 2025. Despite the businesses themselves falling, share prices for the ASX 20 as a collective is up 30 per cent over the same period. By Morningstar's estimations, the ASX 20 is currently running at a premium of about 20 per cent compared to fair value — a level that has rarely been seen in the past decade. Mr Halloway said the main culprit would be the mining stocks, which would once again soften due to weaker commodity prices following the post-Covid boom. 'Financials, our largest sector, should deliver modest growth, but mid-single-digit gains aren't nearly enough to offset the miners' slump,' he said. The call comes as the Australian sharemarket pushed to a new record high over the past week, with markets ignoring tariff uncertainty and weaker local economic data. As of 3.30pm on Friday, the ASX was up 2.2 per cent for the week — its strongest gains since April 10. AMP chief economist and head of investment strategy said the Australian market jumped on the news of softer jobs data, which left the RBA on track to cut rates again in August. 'With unemployment breaking to its highest since the pandemic, and June jobs data showing broad-based weakness, it's now hard to describe the labour market as tight,' he wrote in an investment note.
Yahoo
15-07-2025
- Business
- Yahoo
Lynas Rare Earths (ASX:LYC) Sees 25% Share Price Increase Over Last Quarter
Lynas Rare Earths experienced significant developments recently, with its share price increasing 25% over the last quarter. While the broader market remained stable over the past week and rose 11% over the past year, Lynas's movement may have been influenced by various factors, including announcements made within the timeframe. Although the quarter's events may not singularly justify the extent of Lynas's share price increase, they likely provided subtle support within the context of overall market trends, where forecasts hint at a 15% annual earnings growth across the market. You should learn about the 3 possible red flags we've spotted with Lynas Rare Earths (including 1 which is concerning). Find companies with promising cash flow potential yet trading below their fair value. The recent increase in Lynas Rare Earths' share price could influence the company's positioning in the rare earth market, potentially enhancing its narrative of capitalizing on global supply opportunities. Although the news supported short-term gains, the company's total shareholder return over five years is very large, indicating the potential for sustained growth beyond immediate developments. This long-term performance, particularly when exceeding the Australian market's 5.9% return over the past year, underscores investor confidence in Lynas's strategic initiatives and market expansion efforts. Lynas's focus on expanding its Heavy Rare Earth Circuit could bolster revenue and earnings forecasts, as analysts predict an average annual revenue growth of 49.4% over the next three years. This strategic focus might mitigate the company's sensitivity to fluctuations in market conditions and support the anticipated increase in profit margins to 35.4%. Despite its current share price of A$10.00 trading above the consensus price target of A$8.54, there remains a close alignment, suggesting a fair valuation as per analyst expectations. Investors should consider this within the broader market context while assessing future financial outcomes. Explore Lynas Rare Earths' analyst forecasts in our growth report. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include ASX:LYC. This article was originally published by Simply Wall St. Have feedback on this article? Concerned about the content? with us directly. Alternatively, email editorial-team@
