UBS warns downgrade cycle looms after earnings season

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Equity strategist Richard Schellbach expects analysts to take the knife to earnings expectations through to early 2023.

UBS has warned surging inflation threatens to spark an earnings downgrade cycle for a broad range of ASX-listed businesses battling clogged supply chains, chronic labour shortages andfalling household wealth.

After June’s 6.1 per cent annual inflation print, some engineering and technical workers are expected to score hefty wage rises based on union agreements. A Sydney McDonald’s offered hopeful fast food workers a $1000 joining bonus in July, “The reason [tech] labour costs are a big part of total operating costs is because versus many other industries, the tech industry doesn’t have many raw materials as input costs,” said Mr Schellbach.

 

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