. Uncertainty around the US election has all but dissipated. And the world’s most important central banker, US Federal Reserve chairman Jerome Powell,But for all that, there is no mistaking the building sense of pessimism in the local market around the August earnings season.
While tax cuts and government spending are a help, weak consumer sentiment, the ongoing deterioration in business conditions and softening of the labour market do not suggest a sudden change in direction is around the corner. Compounding this is the interest rate outlook; most economists see little hope of a cut before February 2025, and there’s still a roughly 25 per cent chance a hike will be needed.
But even more notably, Ross says nearly all of this improvement in earnings outlook will be driven by a lift in profit margins, with net profit margins expected to jump from 6.3 per cent to 6.7 per cent in 2025.