Dividend chasers are also in for pain. A third of the top 100 companies have cut, postponed or cancelled payments in the first half, a depressing reminder for many investors that there is still a level of risk with equities, despite the relatively healthy state of the ASX 200 index.

The data so far suggests a fall of nearly 40 per cent in dividend payments from the ASX compared to 2018-19, which was a year of abundance as companies issued special dividends from strong profits or to beat a potential change to franking credit refund policy. With the new lockdown imposed in Victoria, there may be further revisions before ex-dates as financial officers protect cash flow.

“People already know it is bad,” Saxo bank markets analyst Eleanor Creagh says.

“More broadly (a company’s) outlook is going to generate a lot more focus than the actual numbers … which in some cases don’t even really matter.”

Owing to uncertainty over the pandemic and macro outlook, companies will likely refrain from providing profit guidance, instead the emphasis will be on adaptability and sales or earnings growth. Since January, 11 companies out of the top 100 have lowered their guidance, 38 have withdrawn guidance and 28 reaffirmed or increased guidance, according to UBS.

EY partner and investment banking veteran Duncan Hogg says investors will understand why companies cannot provide a detailed outlook “provided the company is able to articulate clearly why they can’t give an outlook statement”.

“But there is no doubt this will be an interesting earnings season in terms of what is actually reported. We are in unprecedented times undoubtedly,” Hogg says.

But investors will be wary of how companies interpret the COVID-19 disruptions and ACY Securities chief analyst Alistair Schultz says a clear narrative could be key to a company’s success.

“A lot of the results are going to suck, but it could be down to how the leadership presents a plan that separates the companies that get hit hard from the companies that do well.”

And not every company is a COVID loser, there will be a bevy of companies that just happened to be offering the right products and services at the right time. Think supermarkets, iron ore miners and ventilator manufacturers.

Financials

The banking sector has been at the epicentre of the dividend issue from the onset of the pandemic. The Australian Prudential Regulation Authority (APRA) was quick off the blocks with its guidance, initially urging banks to scrap planned dividend payments to shareholders before softening its tone last month.

Banks and insurers have been advised to limit payouts to a maximum of 50 per cent of profits and Commonwealth Bank’s results on Wednesday will show how the industry will respond to APRA’s guidance.

Brokers are divided on just how conservative CBA’s board will be. Bell Potter analyst TS Lim, for instance, is forecasting a final CBA dividend of 20¢, down from $2.31 last year. JP Morgan’s Andrew Triggs has pencilled in a higher payout of 85¢ a share. Westpac, National Australia Bank and ANZ Bank will also provide quarterly trading updates this month and commentary on dividends will be firmly on the radar of investors.

Retail

All eyes will be on COVID costs as the retailers line up to report their earnings this month, with investors keen to know just how much companies spent maintaining social distancing in stores and shipping more orders online than ever before. The ongoing effects of JobKeeper on the overall sector will be closely watched by investors.

The greatest damage will be worn by the discretionary and fashion retail space. Myer, Premier Investments and Lovisa are likely to post weaker sales and profits. Conversely, the online-only stores look set to inject a dose of positivity on the back of double-digit sales growth across most major retailers and the likes of Kogan and Temple & Webster more than doubling their market capitalisation in recent months.

Healthcare 

The pandemic has been a mixed blessing for the healthcare sector. Some stocks have benefited while others have been hit hard as the virus forced them to press pause on their day-to-day sales and operations.

Sector heavyweight CSL’s earnings will be closely watched, as will the numbers coming out from hearing implant maker Cochlear. The respective results of both companies will reveal the rigours of the pandemic on their core businesses and the road ahead.

Blood plasma giant CSL’s earnings will show whether COVID-19 has had a long-term impact on the cost and volumes of plasma donations in its main market, the US. Further details on CSL’s vaccine project with the University of Queensland will also be keenly sought.

Meanwhile, Cochlear’s numbers will show how it has weathered the storm given elective surgery shutdowns have disrupted implant sales. Last year it paid a final dividend of $1.75 but is expected to cancel the August dividend this year. Elsewhere, high testing rates for COVID-19 could more than offset earnings weakness for stocks such as Sonic Healthcare.

Technology

The local technology sector has enjoyed the biggest growth this year and players big and small are likely to be fairly upbeat when it comes to outlook. Reporting season seems almost meaningless for the volatile buy now, pay later sector because a series of capital raisings by Afterpay, Sezzle and Splitit has already shed much light on the performance numbers that otherwise would have waited for the full-year results. But as fellow fintech Flexigroup has shown, there is still a lot of bad news potentially lurking in the statements.

Flexigroup factored in a $31 million credit loss provision after looking ahead at the tide of unemployment that will hit the economy over the coming year. And as Citi says of Afterpay (up 695 per cent since March 23): “We are cautious on the outlook for consumer discretionary spend and bad debts when fiscal stimulus measures end.”

Meanwhile, logistics software maker Wisetech has not been on the same rollercoaster as the other tech stocks but all eyes will be on founder and CEO Richard White’s explanation of how the reduced earnout liabilities – which will add more than $100 million to the bottom line for the year ended – does not represent a black mark against its acquisition strategy.

Circuit board designer Altium has already revealed an unaudited 10 per cent rise in revenue but will have to tell shareholders how much its bottom line has been battered by COVID-19. Appen and Xero have financial years ending March 31 and will not be reporting this month.

The mining sector has emerged as a rare bright spot with solid prices for the country’s top commodity exports expected to help companies avoid steep earnings declines. Central to this has been the ebullient iron ore prices, fuelled by resilient demand from China and supply disruptions in Brazil. With spot price above $US100 a tonne BHP, Rio Tinto and Fortescue are all in rude health.

The country’s gold miners, too, have enjoyed a strong run lately, with the yellow metal proving to be one of this year’s best-performing assets as investors seek out safe havens. Gold prices are up almost 20 per cent since the crisis began and this month passed $US1800 an ounce for the first time since 2011, boosting the profits of miners such as Newcrest. Concerns about wider markets and the global economy are expectedto continue supporting the gold price, while the price of copper has been boosted by virus impacts on South American mines.

However, there are fears about the long-term impact of the coronavirus on demand for industrial metals. The outlook for some commodities like coal and copper are emerging as softer than many in the market had been expecting.

Compared to the miners, Australia’s oil and gas sector finds itself facing some tough questions. Lockdown restrictions have seen demand for petrol, diesel, jet fuel and gas plummet and the price shock looks set to reverberate for years to come. In the past month alone, Woodside wrote $6.3 billion off the value of its assets, Origin $1.2 billion and Santos $1.1 billion. Oil Search slashed $500 million and axed a third of its workforce. UBS predicts earnings per share in the energy sector to fall 44.4 per cent largely due to the collapse in prices.

For the top two power utilities – AGL and Origin – earnings in their energy markets divisions will be impacted by slumping demand as offices, small businesses and factories temporarily shut down. They also face tumbling power prices due to an influx of cheap renewable energy entering the grid. Rising economic hardship coupled with huge increases in working-from-home power usage also raises the prospect of a surge in bad and doubtful debts from customers unable to pay their bills.

Telecommunications

The telecommunications sector has been fairly resilient but market leader Telstra’s numbers will be under the microscope. The pandemic has slowed down Telstra’s “T22” restructure program and with the rollout of the National Broadband Network now largely complete, the telco’s boss Andrew Penn’s commentary on the results will signpost an interesting 12 months ahead for the industry.

It will be a much more dire earnings season for the media industry, which has drastically cut costs and in some cases renegotiated with lenders to adapt to significant decline in advertising revenue.

REITs

Finally, investors will be hoping the office and retail property sectors’ post-pandemic future will become clearer as sector heavyweights reveal their results. Many of the main landlords have already warned the market of asset value write-downs but it will be comments on the outlook that will sway sentiment.

Retail landlords have been the hardest hit with close to 90 per cent of tenants being forced to close due to the pandemic. Some of those tenants are unlikely to open their doors again. Malls have survived thanks to supermarkets and food, but they also have a heavy reliance on cinemas, beauty salons and fitness centres, which are closed or struggling. Westfield mall owner Scentre Group and its rival Vicinity have already flagged hefty hits to the value of their respective portfolios.

Meanwhile, the outlook for the office market is mixed with the jury out on whether office workers will return to their desks once COVID-19 is contained.