Australian equities are heading into the February reporting season with improving earnings momentum, driven by strength in the resources sector and a more supportive macroeconomic backdrop, according to Hamish Tadgell, portfolio manager at SG Hiscock. Tadgell noted that expectations for fiscal year 2026 earnings growth have lifted meaningfully since the AGM season, underpinned by a surge in commodity prices and upgrades across the resources sector.
“Earnings growth into 2026 has improved materially, with resources now accounting for around two-thirds of expected market earnings per share (EPS) growth in FY26. Resources earnings growth is running at around 15 per cent, and we expect the positive trends around commodity pricing and currency support to flow through to results,” Tadgell said. SG Hiscock is an Australian fund manager investing in a range of companies. They aim to deliver superior returns to investors through active management and fundamental research.
While the overall outlook is constructive, Tadgell said cost pressures will remain a key theme, particularly for companies with limited pricing power. He expects volatility around individual stock results to remain pronounced, particularly among quality growth names that have experienced valuation sell-offs. Tadgell said that, given the de-rating seen across many quality growth stocks, there is potential for outsized moves this reporting season if companies can demonstrate that underlying business fundamentals remain intact.
From a sector perspective, Tadgell expects most resource companies to report solid results, supported by resilient commodity prices, a weaker Australian dollar, and generally positive demand conditions. He highlighted aluminium and copper producers as particularly well positioned, given supply-side constraints and structural growth drivers.
