With interest rates rising and an abundance of other cost pressures emerging, what should investors take from the February 2023 reporting season? Michael Steele (PM, Smallcap Equities) and Joel Fleming (PM, Microcap Equities) discuss this and more in their earnings season wrap.

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Smallcap Reporting Season Insights

The smallcap market declined 4% during February, as margins came under pressure from elevated costs - in particular rising interest rates - and moderating revenues. However, there are a number of signs that inflation has peaked, with improved supply chains and lower commodity prices underpinning Michael Steele's positive outlook for Australian smallcaps. 

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Microcap Reporting Season Insights

While cost pressure remains a key challenge across the microcap landscape, Joel Fleming was pleased with the performance of his portfolio companies through February. Looking ahead, market volatility is creating compelling entry points ahead of the return to a more normalised operating environment.