Writing about the earnings season for The Australian Financial Review, Tribeca’s Jun Bei Liu says:

Many earnings season bears surfaced in July, warning that markets would retest the March low. But we remained optimistic on the basis that earnings expectations were low and government stimulus was effective.

Even so, we were surprised at the extent of sharp share price reactions following some seemingly ordinary results. So, what have we learnt?

The June half had certainly been very tough for many sectors, particularly those directly affected by the pandemic-induced lockdown. With the lockdown still in place in Victoria, companies in these sectors were certainly cautious when guiding to earnings recovery.

For those businesses, it is all about the trajectory of the earnings recovery, as well as capital preservation. With minimal earnings expectations for 2019-20, many of these outperformed meaningfully.

What surprised us though, was that travel names performed particularly strongly despite the more prolonged recovery outlook.

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