ASX Braces for Wild Earnings Season Amid Algorithmic Trading Chaos
Australia's stock market is bracing for an exceptionally volatile earnings season, driven by algorithmic trading and the rise of 'pod shops'.
Fund managers are cautioning that even minor earnings surprises could trigger significant share price movements, a trend evident in February's reporting season where stocks moved an average of six per cent on results day, marking the largest swing in a decade.
The heightened volatility is expected to intensify this month, exacerbated by recent Reserve Bank of Australia interest rate hikes and elevated energy costs.
Fund managers are largely shunning consumer-facing sectors and housing due to higher inflation and costs, with Jun Bei Liu of Ten Cap divesting from retail conglomerate Wesfarmers.
Cautious fund managers include Hugh Dive of Atlas Funds Management, who holds an underweight position in Commonwealth Bank and zero exposure to NAB, while Sean Sequeira of Australian Eagle Asset Management took profits in supermarket operator Woolworths.