Although overall results were slightly weaker than usual, they were not as dire as feared, AMP’s chief economist, Shane Oliver, said in a recent update.

Profits for the latest financial year fell 4.3%, beating the initial consensus of a 3.5% decline.

The energy sector led the decline, as expected, with significant negative surprises emerging from industrials, telecommunications and utilities. However, consumer stocks provided a glimmer of hope with results that were not as bad as expected.

"The increase in the proportion of companies increasing dividends is positive, but commentary on the outlook was more cautious and this, together with weaker-than-expected overall results for 2023-24, led to a decline in consensus earnings expectations for this financial year to a 4% increase from a 5.4% increase at the start of August,” Oliver said.

"Despite the downgrading of earnings expectations, investors appear to be viewing it with hopes of relief ahead from possible lower interest rates," he added.

Interestingly, 38 percent of companies beat earnings expectations, slightly below the 40 percent norm, while 34 percent missed, also below the typical 41 percent.

In addition, 55 percent of companies reported higher profits compared to the previous year, although this was slightly less than the average of 56 percent.

Dividends also painted a cautious picture, with 56% of companies increasing payouts, slightly below the norm of 59%.

"The good news is that fewer companies are talking about inflation, but unfortunately talk of job cuts has increased," Oliver said.

"Beware of the banks"

VanEck portfolio manager Cameron McCormack noted that amid a challenging economic environment, the ASX reporting season saw shares of companies that beat earnings expectations rise an average of 4.5 per cent, while those that missed fell by 3.1 percent within 24 hours of your profit release.

"We maintain our belief that the S&P/ASX 200 will reach 8300 by the end of the year," McCormack said.

“We see midcaps continuing to show strength through the end of 2024 after being the standouts this season. They report the most net beats, upward price target revisions and offer the highest consensus 12-month price target returns.”

Looking ahead, McCormack warned investors to "watch the banks and keep the miners in mind."

“Investors should be wary of heavy exposure to Australian mega-cap banks and mining companies. CBA is significantly overvalued, with no sell-side analyst recommending it at the current price. It remains the most expensive bank globally, with stagnant profit growth and gradually increasing non-performing loans,” McCormack said.

“With China's steel industry slowing, major players such as BHP Group have expressed concern about declining demand after decades of growth. The one bright spot is Australian gold mining companies, whose balance sheets, cash flow generation and capital allocation strategies have never been stronger. The global cycle of monetary easing is good for gold prices and, therefore, for gold mining companies.”