This year the risk-off environment for equities has hit small-cap equities harder than large caps. Global risk-off has been driven by twin threats of higher global interest rates compounded by the outbreak of conflict in Russia/Ukraine. But In our view, an opportunity is emerging in small caps particularly if concerns around interest rates and Russia/Ukraine were to ease.

We reiterate our positive stance on Aristocrat (ALL), James Hardie (JHX), and SEEK (SEK). In our view, all three companies provide long-term structural growth qualities which are presently being discounted by the market.

This week we share six charts we are watching right now on the Australian equity market. The outlook for the Australian equity market in isolation remains quite encouraging, despite the current geopolitical tensions. Year to date, the Australian market is down -5% vs MSCI World index in A$ which has fallen -10%.

Australian companies have delivered a reasonable reporting season against a highly uncertain operating backdrop. We look at what’s driving this performance and share the changes we’ve made to the Wilsons Australian Equity Focus List against this backdrop.

The higher inflation narrative caught up with global markets in January this year. We look at some of the ways investors can position for the prospect of higher inflation (and interest rates) and examine some of the inflation beneficiaries.

Following results updates from all four major banks this month, we outline our case for why investors should be market weight the major banks and share the three core issues we believe investors will focus on over the next 6-12 months.

Despite a rising oil price environment, the performance of Australian energy stocks has been disappointing. We see an opportunity for the Australian energy sector to see a significant rerating by adopting a capital allocation strategy more akin to what the global oil majors have done.

February reporting season will have everything to talk about but little to show in terms of earnings growth, with the Omicron variant casting a shadow on the near-term earnings recovery. And while there is a lot of noise around the still lingering impacts of COVID-19, we remain optimistic that Australian earnings can still grow in 2022.