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What we learned from ASX shares in the February earnings season

The February earnings season is now wrapping up which is a good time to reflect. Let’s look at what was affecting ASX share price valuations in a huge month of market movements.

Earnings started strong but faded fast

It was a strong start to the season as the Australian real estate investment trusts (REITs) posted strong results. SCA Property Group (ASX: SCP) and DEXUS Property Group (ASX: DXS) led the way for ASX shares early in the month but we did some see disappointing results to finish in February.

It wasn’t just the REITs that underperformed, and in fact, they may have been the pick of the bunch. ASX tech and energy shares were arguably the hardest hit but that wasn’t all primarily due to earnings…

There were other factors affecting ASX shares in February

While weaker corporate earnings certainly didn’t help ASX shares last month, it wasn’t just down to profits and losses.

The February earnings season coincided with other factors hitting valuations such as fears over the coronavirus epidemic.

In some cases, however, these two were also relatively intertwined. We saw Blackmores Limited (ASX: BKL) and Treasury Wine Estates Ltd (ASX: TWE) shares slump lower in February due to weak earnings.

However, much of the supply chain and/or demand for these ASX shares also came from China which made them susceptible to a shutdown of manufacturing and reduced economic output.

ASX tech share valuations see a correction

There’s no doubt that ASX tech shares have been delivering for shareholders in recent times. However, February saw the correction that many investors believed was long overdue.

The Altium Limited (ASX: ALU) share price slumped 22.67% lower in February among others. This came on the back of slower growth and concerns about the impact of the coronavirus on its operations

Both Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO) fell 13.9% lower during the month but remain hundreds of percent higher from their initial public offering (IPO) prices.

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Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO. The Motley Fool Australia owns shares of and has recommended Blackmores Limited and Treasury Wine Estates Limited. The Motley Fool Australia owns shares of Altium, Shopping Centres Australasia Property Group, and Xero. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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