ASX 200’s July Leaders Hit Speed Bump as New Month Begins

After delivering spectacular returns that propelled them to the top of the ASX 200 leaderboard in July, Viva Energy and AMP shares stumbled in the opening session of August trading as markets took profits following their remarkable run.

Viva Energy shares (ASX: VEA) closed the first trading day of August down 2.11%, while AMP Ltd (ASX: AMP) retreated 1.4%. The pullback follows an extraordinary July performance that saw Viva Energy surge 38% to claim the top spot on the benchmark index, with AMP close behind at 33.5%. The early-month dip appears consistent with typical profit-taking behaviour after such strong gains, rather than signalling a fundamental shift in sentiment toward either company.

Oil prices are sharply lower in the first trading day of August, with Brent down 5.78% at US$82.85, and WTI down 6.78% at US$78.93. The pullback comes following reports over the weekend that President Trump is set to reconvene talks with Iran on Monday, and has put strikes on hold.

Outside of the macro backdrop, both stocks had attracted significant attention from markets during July as investors repositioned portfolios in response to upgraded earnings guidance that suggested a material improvement in near-term profitability. The question now facing markets is whether the July rally has priced in all the good news, or whether these companies are entering a sustained period of stronger earnings power.

Viva Energy’s Refining Windfall

The catalyst for Viva Energy’s market-leading performance was the release of preliminary results for the first half of FY 2026, which revealed a dramatic improvement in operating conditions for the fuel retailer and refiner. The company expects group EBITDA on a replacement cost basis to reach $770 million to $780 million for the half—more than double the $305 million recorded in the prior corresponding period.

The extraordinary uplift reflects what management describes as a substantially improved refining margin environment. CEO Scott Wyatt attributed the results to “a regional shortage of oil supply and refining capacity, as well as improving retail sales growth and continuing strength of our commercial businesses.”

Wyatt’s commentary highlighted the strategic importance of domestic refining capacity, noting that “domestic refining has reduced dependency on international refineries and will continue to play a critical role in maintaining fuel supply security into the future.” The statement underscores how Viva Energy’s integrated model, combining refining assets with an extensive retail and commercial distribution network, has positioned the company to capture exceptional value during a period of tight regional supply.

The Geelong refinery, one of only two remaining refineries in Australia, has become a critical national asset as global supply chains remain disrupted and regional refining capacity struggles to meet demand. This scarcity dynamic has pushed refining margins to levels not seen in years, creating a windfall for operators with domestic production capability.

Beyond refining, Viva’s retail operations have shown resilience with improving sales volumes across its network of service stations, including the recently integrated OTR and Liberty brands. The commercial business, serving aviation, mining, and industrial customers, continues to deliver stable volumes under longer-term contracts that provide a degree of earnings visibility even if retail conditions soften.

AMP’s Turnaround Gains Credibility

AMP’s 33.5% July surge came on the back of first-half FY 2026 profit guidance that exceeded market expectations and provided tangible evidence that the company’s multi-year restructuring effort is finally bearing fruit. The financial services group expects underlying net profit after tax of $170 million to $180 million for the half, driven by two key factors: stronger China partnerships and increased investment income.

The China partnership element represents a potentially significant development for AMP’s wealth management and investment platforms. Stronger cross-border distribution arrangements suggest the company is successfully diversifying its revenue base beyond the mature Australian market, tapping into demand from offshore investors seeking exposure to Australian assets and expertise.

Increased investment income reflects both the higher interest rate environment and improved portfolio performance across the company’s investment management division. This combination has delivered a material uplift in bottom-line profitability that markets had previously questioned.

AMP’s transformation has been long and painful, marked by regulatory scrutiny, reputational damage from the Royal Commission into banking misconduct, and years of restructuring costs. The company has invested heavily in digital platforms, including the North Interactive Wealth Portal designed to improve adviser engagement and client experience, while also developing retirement products such as MyNorth Lifetime to capture structural growth in superannuation and retirement income streams.

The July guidance represents the clearest signal yet that these investments are translating into sustainable earnings growth, rather than simply offsetting legacy headwinds. For a company that has traded at a persistent discount to peers due to execution concerns and regulatory overhang, the guidance offered a compelling reason for markets to reassess valuation assumptions.

The Cyclicality Question

The early-August pullback in both stocks highlights the central tension in the bull and bear cases. For Viva Energy, the debate centres on whether current refining margins represent a new normal or a cyclical peak. Refining spreads are notoriously volatile, driven by complex interactions between crude oil prices, product demand, capacity utilisation, and trade flows. History suggests that periods of elevated margins eventually attract new supply or demand destruction, leading to mean reversion.

Bears argue that valuing Viva on an annualised run-rate from the first half of FY 2026 risks overstating sustainable earnings power. If regional supply bottlenecks ease; whether through new capacity, improved logistics, or weaker demand, margins could compress sharply. The capital-intensive nature of refining, combined with ongoing environmental compliance costs and potential regulatory intervention in periods of high profitability, adds further risk to the bull case.

Bulls counter that structural under-investment in refining capacity, particularly in the Asia-Pacific region, means supply will remain tight for longer than sceptics expect. They point to the strategic value of domestic refining for energy security, which may provide implicit policy support and reduce the risk of forced asset closures. The combination of elevated margins and solid volume growth across retail and commercial channels suggests Viva can sustain meaningfully higher earnings even if margins moderate from current levels.

For AMP, the quality and sustainability of earnings remain the key questions. Markets are trying to determine how much of the NPAT uplift is structural versus cyclical or market-driven. Investment income can be volatile, influenced by mark-to-market movements and short-term rate fluctuations. China partnership revenue may be concentrated in a small number of relationships, creating concentration risk if those partnerships weaken or regulatory conditions change.

The Setup

From a technical perspective, both stocks entered August significantly overbought after their July runs. Short-term traders and momentum investors who rode the rally have natural incentives to lock in profits, particularly ahead of the formal first-half results releases where any disappointment relative to preliminary guidance could trigger volatility.

The coming weeks will be critical for both companies as they release full first-half results and provide more detailed commentary on trading conditions and outlook.