A bit more from the J.P. Morgan research note on the reporting season. Here are some key lessons the big broker pricked out

1. Farewell COVID: the new normal? — The distortions of COVID have passed, with numerous companies pointing to "normalisation". For instance, Qantas's "intention to travel index" points to stabilisation. Ansell's CEO remarked that the sector is back to 'normal' and de-stocking has played out.

2. Consumer: bifurcated — The consumer backdrop is resilient, but uneven. Certain categories have momentum (Breville, JB HiFi), while others are battling (Accent, Lovisa, Big W). Of concern is a multi-year high in retail insolvencies.

3. Consumer: cost-of-living pressures looms large — Cost-of-living pressure loomed large across the season, with numerous companies referencing changed consumer behaviour in response to household budget pressures (Medibank, Wesfarmers, Woolworths). Alongside our economists and retail team, we expect tax cuts and higher real wages to support consumption in FY25.

4. Consumer: the appetite for travel is stabilising, ticket prices are deflating — Travel-exposed companies pointed to a
"stabilisation" in demand, with certain segments softening, such as premium leisure (Qantas) and corporate (Flight Centre).

5. Energy transition: slow, hard and needs gas — APA and Origen both pointed to the importance of gas remaining a component of the energy mix out to 2040. In other parts of the market, electric vehicles for instance, there was evidence (Ampol) of the transition being on a longer timeline.

6. Housing: chronic underbuild, weak FY25 — The "chronic under-supply" (Carindale Property Trust, Mirvac) of housing across the country looks set to persist, with numerous companies (GWA, Reece, Reliance) pointing to a weak 12-18 months ahead.

7. AI: increasing evidence of practical application — An interesting aspect of the season was increasing evidence of AI's practical application. The insurers (AUB Group, IAG) were prominent, with claims processing and underwriting both being supplemented by AI.

8. Office market: hints of a bottom — Mixed messages emanating from the office sector. On the one hand, Charter Hall pointing to a nascent recovery, while it's clear that Dexus, for example, still faces challenges. Return to office trend remains intact, with CBA calling out higher occupancy costs as a result.

9. Labour supply: de-pressurising — A clear feature of the season was improved labour supply. Numerous companies (Telstra, Ventia Services) pointed to a sharply higher rate of applications per open position. This reflects trends evident in Seek's application data.

10. Margins: degradation persists — EBITDA margins were revised lower for every sector through August, with the sharpest downward revisions in Communications (Nine Entertainment, Seek) and Industrials (Aurizon, Qube). Inflation is still a factor, with Qantas, for example, calling out "inflationary pressure outpacing transformation".

11. Interest costs: pressures moderating — In contrast to February, our team's overall interest charge forecasts only increased slightly through the season. The largest increases were again in REITS (Charter Hall, Mirvac), as well as in Industrials (Aurizon, Brambles).

12. Balance sheets: strong and set to remain so — Australian corporates remain lowly geared and have little appetite to lever up. While there were some new or refreshed buybacks, none are particularly ambitious.