Rudi's View | 10:00 AM
With August results approaching, investors better prepare for a spike in share price volatility.
By Rudi Filapek-Vandyck, Editor
The list of potential risks for Australian investors received an extra item to worry about on Monday morning, as Morgan Stanley warned the interplay between global and domestically sourced macro risks is increasing the chances of stagflation, i.e. persistently high inflation combined with tepid economic growth.
It's not as if that list didn't already contain plenty of potential mishaps, from geopolitics (the Middle East and Ukraine) to renewed inflation pressures and a hawkish RBA, falling property prices and a fragile-looking consumer, widely disliked changes to capital gains taxation, and a heavily polarised, though lacklustre, share market.
Put it all together and is it any wonder the ASX200 has hardly managed to make any progress since the start of 2026?
On Friday, total gains excluding dividends after nearly seven months stood at a very underwhelming 0.67%.
As reported last week, both the average and median year-to-date returns for the 200 stocks involved are negative, at -4.21% and -4.54%, respectively.
Against this background, investors are bracing for what could potentially become another brutal reporting season in August.
The Best Year Since FY22
At face value, market forecasts are for aggregate earnings-per-share growth for the ASX200 of circa 12% in FY26; the fastest pace since FY21 and FY22, when the world was transitioning out of societal lockdowns.
Australia has since suffered three consecutive years of net negative growth, so FY26 marks an important turning point. But that's assuming the 12% survives throughout August, and there's plenty of doubt about that.
Strategists at Morgan Stanley, for example, predict that number might well halve once all earnings releases have been accounted for.
Peers at UBS explain the 12% growth rate instantly falls to 4.5% once forecasts for resources companies are removed, and to only 2.5% if the banks are also excluded.
The message for investors seems loud and clear: expect disappointments and downgrades.
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