Corporate earnings season has showcased the immense strength and resilience of the traditional pillars of the economy – mining, resources and banking – and revealed some light at the end of the tunnel for sectors hit hardest, such as travel and aviation.
BHP chief executive Mike Henry: “We think that demand-led inflation is broadly going to be positive for commodities.”Along the way, some lockdown heroes have been crunched at the first sign of a return to normal crimping their earnings, or at least had a slip of the halo as accumulated challenges of managing strained supply chains and elevated stocks amid successive waves of COVID-19 lockdowns take their toll.
The prospect of higher interest rates has intensified investors’ focus on the eye-popping valuations achieved by a handful of market darlings, especially in tech and retail, with the result that earnings misses and signs of concern in the outlook have been punished.
Fortescue Metals Group CEO Elizabeth Gaines said a reduced dividend payout was driven by caution on the iron ore outlook, not by a plan to invest heavily in green energy.– $US7.6 billion paid from net profit of $US9.71 billion. Chief executive Mike Henry warned of a decade of inflation ahead although “we think that demand-led inflation is broadly going to be positive for commodities”. Rio also benefited from the strength in “electrification metals” copper and aluminium, and BHP from copper.