Australia’s share market has taken a breather after multiple records, with equities in a holding pattern until the next major catalyst emerges.

The benchmark S&P/ASX200 fell eight points on Friday, down 0.09 per cent to 9,263.6, after a five-day winning streak and all-time highs in the previous two sessions. 

The broader All Ordinaries eased by 6.9 points, or 0.07 per cent, to 9,445.1.

Energy stocks rose in line with oil prices after Iran and Oman’s plan to reopen the Strait of Hormuz while barring US and Israeli ships dashed hopes of an imminent peace deal.

“Iran feels it ‘holds the cards’ given it can still effectively block ship traffic through the Strait of Hormuz (and to a degree the Red Sea) and all of America’s bombing can’t seem to shake the regime,” Betashares chief economist David Bassanese said.

“A deal between Iran and Oman would block US and Israeli ships crossing the Strait – but this must surely be an ambit claim as the US could never agree to that.”

However, raw materials stocks continued to rally as gold, lithium and rare earths miners soared on lower inflation expectations and upswings in underlying commodity prices.

Gold is trading at seven-week highs of $US4,297 ($A6,109) an ounce, after easing global inflation fears softened the US interest rate outlook, helping non-yielding assets rebound.

Shares in Australia’s largest company BHP gained 4.5 per cent since Monday to trade at $62.97, its heightened copper exposure paying off as AI-related demand for the base metal soars.

Financials continued their hot streak, trading near record highs and clocking gains in eight of the past nine weeks as the major banks recovered from a second quarter slump.

Consumer-facing stocks also improved in recent weeks, buoyed by softer-than-expected June inflation and resilient household spending.

Looking ahead, all eyes will be on the Reserve Bank’s Tuesday meeting for signs of Australia’s interest rate path ahead.

“The RBA will likely revise down their inflation forecast next week and hold rates unchanged, but don’t expect this to be the end of the hiking cycle,” AMP economist My Bui said.

The central bank would retain a hawkish bias, and AMP expected another rate hike in November if core inflation remained sticky, Ms Bui added.

In company news, Coles confirmed it will offshore hundreds of back office jobs in a multi-year deal with Accenture.

Earnings season continued to deliver a mixed bag, as James Hardie shares soaring on a strong first quarter update, Nick Scali dipped on a dim retail and supply chain outlook, while ResMed tumbled seven per cent after flagging “very modest” prices increases.

The Australian dollar is buying 70.33 US cents, down from 70.42 US cents on Thursday at 5pm.

ON THE ASX:

* The S&P/ASX200 fell by eight points, or 0.09 per cent, to 9,263.6

* The broader All Ordinaries lost 46.6 points, or 0.07 per cent, to 9,445.1

One Australian dollar trades for:

* 70.33 US cents, from 70.42 US cents at 5pm AEST on Thursday

* 111.37 Japanese yen, from 111.13 Japanese yen

* 61.04 euro cents, from 61.00 euro cents

* 52.28 British pence, from 52.32 pence

* 119.90 NZ cents, from 119.92 NZ cents

Shares of Tata Group’s apparel arm, Trent, declined 3% to hit an intraday low of Rs 3,028 on the BSE on Friday after the company reported a 21% year-on-year (YoY) increase in consolidated net profit to Rs 519 crore for the quarter ended June.

The company had posted a consolidated net profit of Rs 430 crore in the corresponding quarter last year. Revenue from operations grew 18% YoY to Rs 5,755 crore during the quarter. Compared with the March quarter, Trent’s consolidated net profit rose 25% from Rs 413 crore, while revenue from operations increased 14% from Rs 5,028 crore.

Buy, sell or hold Trent shares?

Morgan Stanley maintained its ‘Overweight’ rating on Trent and raised its target price to Rs 3,406 from Rs 3,151, implying an upside of around 10%.

The brokerage said Q1FY27 EBITDA margin came in well ahead of expectations, supported by year-on-year (YoY) gross margin expansion, while EBITDA growth remained strong despite higher depreciation weighing on profit before tax.

Morgan Stanley also reaffirmed its preference for the company-operated expansion model, raised its EBITDA margin assumptions following the strong quarterly performance, and flagged the Middle East conflict as a near-term risk to consumer sentiment.

Also read: Tata Sons faces continued listing uncertainty after RBI classification
Motilal Oswal maintained its ‘Buy’ rating on Trent with a target price of Rs 3,775, implying an upside of around 21%. The brokerage said the retailer continues to prioritise cluster-level revenue growth and expanding its market share across key micro-markets, rather than focusing on store-level like-for-like (LFL) growth.It noted that Trent remains focused on deepening Zudio’s penetration while accelerating store additions for Westside. Despite rising raw material costs and supply chain risks, the brokerage highlighted the company’s strong margin expansion during the quarter and said management expects supply chain initiatives, closer supplier engagement and calibrated pricing to help sustain margins.

Macquarie maintained its ‘Outperform’ rating on Trent with a target price of Rs 3,600, implying an upside of around 16%. The brokerage said the company delivered a strong Q1 earnings beat, reflecting healthy demand. It attributed the gross margin outperformance to the rising contribution of higher-margin Westside sales. Macquarie also said management’s clarification on FY27 store additions and its constructive commentary on demand reinforced its confidence in sales growth. It added that Trent has multiple levers to manage input cost pressures and sufficient lead time to implement changes, limiting the impact on margins.

Bernstein reiterated its ‘Outperform’ rating on Trent with a target price of Rs 3,500, implying an upside of around 13%. The brokerage said the company once again exceeded profitability expectations while continuing to execute on its growth strategy. It highlighted that Trent has delivered on its store addition plans, sustained growth and consistently improved margins. Bernstein believes the retailer can maintain steady-state growth of 18%-20%, although it remains cautious about near-term macroeconomic headwinds.

Read more: ET Exclusive: Tata Sons reported a 22% increase in annual profit for the year ended March 26

HSBC maintained its ‘Buy’ rating on Trent with a target price of Rs 3,390, implying an upside of around 12%. The brokerage said Q1 EBITDA exceeded its estimates by around 10%, driven by stronger gross margins, which it believes reflected the lagged benefit of lower raw material costs. It noted that the fashion business reported low single-digit like-for-like (LFL) growth, while management’s commentary was mixed but marginally more positive than in Q4FY26. HSBC added that a pickup in growth remains the key catalyst for the stock.

Jefferies remains bearish on Trent

Jefferies maintained its ‘Hold’ rating on Trent and raised its target price to Rs 3,435 from Rs 3,110, implying an upside of around 13%.

The brokerage said strong earnings growth in the first quarter was driven by margin expansion and continued store additions, particularly at Zudio. It noted that like-for-like growth remained in the low single digits, partly due to store densification. Jefferies added that management’s commentary remained cautious on near-term demand amid geopolitical uncertainty, which could push up commodity prices and affect both demand and supply chains, with the company already witnessing cost inflation.

Shares of Honeywell Aerospace tumbled Thursday morning, falling 19.96%, or $40.64, to $163.00, after the newly independent aerospace and defense supplier delivered its first quarterly report since separating from Honeywell International and disclosed a significant cut to its full-year sales and earnings guidance, citing persistent supply chain constraints.

The stock’s decline extended a steep drop that began in after-hours trading Wednesday following the release of second-quarter results, when shares initially fell between 10% and 17% before continuing to slide further as regular trading opened Thursday, pushing the stock well below its previous close of $203.64.

A Difficult First Report as an Independent Company

Honeywell Aerospace, based in Phoenix, completed its formal separation from Honeywell International on June 29, becoming an independent, publicly traded company for the first time. Thursday’s results marked the company’s inaugural earnings report as a standalone entity, and while the underlying quarterly performance beat Wall Street’s revenue expectations, investors focused overwhelmingly on the company’s sharply reduced forward guidance.

The company reported second-quarter organic sales of $4.5 billion, up 5% from a year earlier, alongside adjusted earnings of $1.78 per share. While the revenue figure topped analyst expectations, the results were overshadowed by a substantial downward revision to the company’s outlook for the remainder of the year.

Guidance Cut Sends a Clear Signal

Honeywell Aerospace now expects full-year organic sales growth of 4% to 5%, down sharply from its prior forecast of 7% to 9%. The company also projected full-year adjusted earnings per share of $7.60 to $7.90, well below the $8.86 average analyst estimate compiled by LSEG, representing a reduction of roughly 12.5% at the midpoint relative to consensus expectations. Adjusted EBIT guidance was similarly lowered to a range of $4.35 billion to $4.45 billion, down from a previous forecast of $4.65 billion to $4.75 billion, a decline of $300 million, or roughly 6.4%, at the midpoint. Guidance for second-half free cash flow was not revised as part of the update.

Honeywell Aerospace Chief Executive Jim Currier addressed the guidance cut directly, telling investors that the company’s actions so far had not been good enough to keep pace with demand. Currier said that for the second half of 2026, the company believed it was prudent to align its guidance with what its supply chain had actually demonstrated it could deliver by the end of the second quarter, rather than continuing to forecast based on earlier, more optimistic assumptions.

Supply Chain Bottlenecks at the Root of the Problem

The company attributed the bulk of its earnings shortfall to ongoing supply chain constraints, which it said had limited its ability to keep pace with surging aftermarket demand for its aerospace components and systems. According to the company’s disclosures, supply limitations affecting a small fraction of its supplier base, roughly 2% of suppliers by one estimate, nonetheless constrained overall output growth and forced a shift in production mix toward lower-margin products, weighing on profitability even as top-line sales continued to grow.

The company’s Engines and Power Systems segment bore the brunt of the impact, with adjusted earnings before interest and taxes in that unit falling by $82 million, an amount that alone exceeded the company’s total net earnings decline of $71 million, according to a breakdown of the results. The company’s Control Systems segment partially offset that decline, contributing a $28 million improvement. Honeywell Aerospace also disclosed roughly $100 million in one-time charges tied to inventory adjustments and costs associated with its recent separation from Honeywell International, further weighing on reported profitability for the quarter.

Strong Demand Signals Amid the Weak Guidance

Despite the disappointing outlook, the company’s underlying demand picture remained notably strong. Honeywell Aerospace reported that its order backlog grew 9% to $18.15 billion during the quarter, while aftermarket sales, a key indicator of ongoing demand for maintenance, repair and overhaul services on existing aircraft and equipment, climbed 8%. That combination, robust demand paired with an inability to fully convert it into sales and earnings due to supply constraints, has been the central tension underlying the stock’s reaction, according to analysts who covered the results.

A Response Plan Already Underway

Honeywell Aerospace has outlined a series of steps aimed at addressing its supply chain challenges. According to the company, it is currently in the process of adding more than 50 new suppliers to its network, with an additional 50 suppliers targeted for onboarding later in the year. The company also said its spending on supplier tooling is expected to increase by roughly 20% compared with the first half of 2026, an investment intended to help expand production capacity and reduce the bottlenecks that weighed on the most recent quarter’s results.

Analysts React With Caution

Wall Street’s initial reaction to the results reflected broad concern about the near-term trajectory for the stock. One market strategist, commenting on the results, noted that aerospace stocks typically perform well on a pattern of beating expectations and raising guidance, rather than missing forecasts and cutting outlooks, suggesting Honeywell Aerospace could face a bumpy trading environment until its results demonstrate a clearer turnaround. Morgan Stanley had already lowered its price target on the stock to $235 from $255 in mid-July, ahead of Thursday’s results, reflecting some analyst caution heading into the report even before the scale of the guidance cut became clear.

Despite Thursday’s sharp decline, the stock’s average 12-month analyst price target remained well above its current trading level, with five analysts maintaining buy recommendations and none recommending a sell, according to available coverage, suggesting that at least some segment of Wall Street continues to view the pullback as a potential buying opportunity contingent on the company’s ability to resolve its supply chain issues over the coming quarters.

With Honeywell Aerospace now working through its plan to add new suppliers and increase tooling investment, investors are likely to closely watch upcoming quarterly updates for evidence that the company’s production constraints are beginning to ease. As a newly independent company navigating its first major guidance revision since separating from its former parent, Honeywell Aerospace’s ability to demonstrate a credible path back toward its original growth targets is expected to remain the central focus for investors through the remainder of 2026.