The S&P/ASX 200 fell 0.2 per cent following a 0.5 per cent decline on Wednesday. The Australian dollar weakened to US70.48¢.
Commonwealth Bank shares fell 2.2 per cent as investors took profits following its strong annual result. Meanwhile, Rio Tinto declined 3.6 per cent after securing government support for the Tomago aluminium smelter.
The banking sector also provided an important indicator for investors. ANZ reported quarterly cash profit of $1.9 billion, up 2 per cent, but home loan applications have fallen 12 per cent since the May federal budget. Commonwealth Bank has reported a similar decline.
Origin Energy also rose after exceeding expectations for full-year profit. Its results highlighted the opportunities associated with renewable energy and the challenges created by higher infrastructure costs and regulatory uncertainty.
Cleanaway Waste Management provided another area of interest after receiving a takeover proposal from EQT Infrastructure. Potential acquisitions can create opportunities for investors while demonstrating the value strategic and private equity buyers may see in established businesses.
Energy prices important for Australian companies. Higher oil prices linked to uncertainty around the Strait of Hormuz could increase expenses. Businesses with significant fuel consumption may need to consider how sustained increases would affect margins.
What This Means for Businesses and Investors
Rising energy and borrowing costs can quickly affect day-to-day profitability. A review can help identify areas where costs may need to be controlled. Investors should look beyond share-price movements and assess whether companies have sustainable cash flow, manageable debt and the ability to pass higher costs on to customers.
Tax and record-keeping considerations
Businesses should ensure expenses and transactions are accurately recorded. Changes to tax rules may also require adjustments to financial planning.
Practical actions you may wish to discuss with your accountant
Business owners should discuss cash-flow forecasts and potential tax consequences with their accountant. Reviewing these areas regularly can help businesses remain financially prepared as market conditions change.
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Disclaimer: The information in this article is general in nature and does not constitute financial, investment, taxation, legal or accounting advice. Readers should obtain professional advice relevant to their individual circumstances before acting on any information contained in this publication.
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