Australia’s Wildest Reporting Season Yet: What It Means for Investors

As we wrap up Australia’s most recent reporting season, it has proven to be one of the most volatile in decades. On the surface, the S&P/ASX 200 looked strong, briefly breaking through the 9000 mark for the first time in history. But beneath this milestone, investors were surprised by some of the biggest share price moves in years.

Well-known companies felt the sting. CSL, a long-time market favourite, tumbled after announcing plans to spin off its vaccine arm. James Hardie fell almost 30 per cent in a single day — its sharpest drop since the 1970s — while Woolworths saw its worst sell-off in more than three decades. In fact, almost one in five companies saw their share prices swing by 10 per cent or more during August, far higher than usual. To me it demonstrates what many of us feel – markets are moving faster and faster as time goes on. Is this level of volatility the new norm? Does the use of AI to interpret results have a part to play in all of this?

A contributor to the volatility is the high concentration of the Australian sharemarket. The top 10 companies make up nearly half of the ASX 200, meaning the market depends heavily on a handful of banks, miners and retailers. When expectations aren’t met, the impact on share prices is magnified. Unlike markets such as the US, where innovation has reshaped the leaders over time, Australia’s market has remained tied to the same sectors for decades.

Another factor is how investors are valuing companies. Much of the recent rise in the market has been driven not by stronger profits, but by investors paying more for each dollar of earnings. The major banks, supported by strong property markets, have done much of the heavy lifting. Meanwhile, businesses linked to real economic activity, like home building and construction, have struggled as costs rise and demand softens. Thankfully it seems like many of the costs tied to construction and home improvement are easing (or at least plateauing).

So where does this leave investors? While the headlines can feel unsettling, it’s worth remembering that volatility also creates opportunity. When quality companies experience sharp price falls, it can open the door for investors to buy into strong businesses at more attractive prices. In the same vein – stocks that jump in price provide the opportunity to take some profit of the table.

The lesson from this reporting season is two-fold: first, that diversification across industries and geographies is vital in such a concentrated market; and second, that patience can be rewarded. At Hewisons, we are always looking to invest in the best opportunities across a variety of markets, meaning you are not simply gaining exposure to the ‘top-end-of-town’. Market sell-offs are often emotional and short-lived, while the underlying value of many businesses is far more stable than a single day’s trading might suggest.

The August reporting season may have felt like a rollercoaster, but periods like this can set the stage for long-term gains. For investors willing to look through the noise, volatility isn’t just a challenge — it can be an opportunity to position for future growth.