Company earnings may shed light on how rate hikes are affecting shoppers as Australian retail sales show signs of cooling. Any changes in consumer spending after the RBA’s moves will be closely tracked, Morgan Stanley analysts led by Chris Nicol wrote in a note.

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The rate increases might aid banks’ net interest margins, the broker added. Whether that benefit can boost their share prices “will set a broader tone for the market,” according to Morgan Stanley.

The nation’s biggest bank, Commonwealth Bank of Australia, reports on Wednesday.

Key stocks to watch: Woolworths (year-to-date share performance +0.2 per cent), Commonwealth Bank (YTD -0.5 per cent), Harvey Norman (YTD -16 per cent), JB Hi-Fi (YTD -11 per cent, Qantas (YTD -8.2 per cent)

Resource reprieve?

As a lifeline to our economy, the resources sector will be in focus amid sliding iron ore prices, China’s property crisis and increasing cost pressures.

Citigroup expects a pandemic-fuelled materials boom to continue in the near term and boost mining earnings.

Still, JPMorgan downgraded materials to neutral from overweight due to ongoing macro concerns and an uncertain dividend outlook for miners, the broker said in a note.

Key stocks to watch: BHP (YTD 4.5 per cent), Fortescue Metals Group (YTD -6.2 per cent), Champion Iron (YTD -16 per cent), Woodside Energy (YTD +48 per cent)

Labour challenges

Commentary on labour problems will be closely watched after companies from miners to airlines have bemoaned staffing gaps.

BHP and Rio Tinto have both cited labour shortages as a drag on production. Qantas has faced backlash after cancelling flights or delaying services due to a lack of workers.

“Last results season saw management teams cite the particular difficulties in finding skilled trade professionals,” UBS analysts including Richard Schellbach wrote in a note. “Companies operating in financial services and technology fields will also provide comments on the challenges they are facing in filling positions in more white-collar fields.”

Key stocks to watch: BHP, Fortescue, Woolworths, Qantas, Bega Cheese (YTD -38 per cent), Suncorp Group (YTD +3.8 per cent)

Dividend watch

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Among companies on the local benchmark, those reporting this month are set to pay out about $15.29 billion in dividends, a 26 per cent increase from the same period last year, according to data compiled by Bloomberg.

Energy shares are expected to lead payment growth in 2022 thanks to soaring commodity prices. Consumer discretionary firms are tipped for the largest decline after some of them omitted payouts earlier this year.

Miners will be in the spotlight after Rio slashed its dividend. Still, Citigroup analyst Liz Dinh expects strong cash flows and under-geared balance sheets to allow large miners to deliver high shareholder payouts, according to a note to clients.

The rebound in international tourism may provide scope for travel firms like Qantas to reinstate shareholder payouts.

Key stocks to watch: BHP, Commonwealth Bank, Newcrest Mining (YTD -22 per cent), Qantas, Whitehaven Coal (YTD +146 per cent)

Bloomberg

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