ASX Earnings Season Set for Heightened Volatility Amid Rate Hikes

Australian fund managers say the upcoming earnings season on the Australian Securities Exchange (ASX) will be unusually volatile. Algorithmic trading and the rise of high‑speed “pod shops” mean even modest earnings surprises can move stocks sharply – February saw an average 6 % swing on results day, the biggest in a decade, according to Morningstar.

The volatility is expected to intensify as the Reserve Bank of Australia has lifted its cash rate to 4.35 % after three hikes this year and energy costs remain elevated. Managers are pulling back from consumer‑facing and housing stocks – for example, Ten Cap co‑founder Jun Bei Liu has sold Wesfarmers, while Atlas Funds’ Hugh Dive is underweight Commonwealth Bank and holds no exposure to NAB. Some have taken profits in retailers such as Woolworths.

Attention is shifting to technology, defence, energy and healthcare. Liu is buying health‑care firms ResMed and Ramsay Health Care and AI‑infrastructure providers Southern Cross Electrical Engineering and GenusPlus. Sean Sequeira added Computershare and Cochlear, while Jackson Aldridge is bullish on AI and electrification through SKS Technologies, Megaport, Electro Optic Systems and Elsight. Dive has increased exposure to energy producer Woodside, seeing market overreactions as buying opportunities.