Month: May 2022

Fortescue Metals Group Limited (ASX: FMG)’s green energy venture, Fortescue Future Industries is looking to spin a retired coal mine into a green hydrogen production facility.

Fortescue founder and chair, Andrew Forrest said the project could help North America transform into another “global green energy heartland”.

Let’s take a closer look at how the green hydrogen leader could shift gears at the coal-fired power plant.

Fortescue Future Industries eyes ageing coal asset

Fortescue’s green hydrogen leg has signed an agreement with the Industrial Park at TransAlta – located in the US state of Washington – under which it will explore the potential production of green hydrogen at the site of the state’s last coal-fired power plant.

The park sits adjacent to the Centralia power plant. It’s earmarked for closure in 2025.

FFI believes transforming the site into a green hydrogen production facility could birth a hydrogen hub in the United States’ Pacific Northwest region.

The futuristic fuel’s production facility might appear odd alongside the fossil fuel-powered relic.

However, it could help to decarbonise some of the United States’ hard-to-abate sectors like long-haul trucking, ports, aviation, and heavy industry, according to FFI North America CEO, Paul Browning.

Forrest commented:

Repurposing existing fossil fuel infrastructure to create green hydrogen to power the world is part of the solution to saving the planet.

The signing of this agreement is another important step in … implement[ing] the technologies carbon emitters need to reach net zero.

The green energy entity intends to employ those working at the soon-to-close power plant at the proposed facility. FFI is also looking to apply for a US Department of Energy Hydrogen Hub Program grant alongside other stakeholders.

It’s the latest in a string of coal-fired power plants FFI has flagged for future re-purposing. In fact, it’s not even the first time Forrest has labelled a region a future “global green energy heartland”.

He previously used the stirring term when describing Australia’s Hunter Valley. There, FFI is exploring generating green hydrogen at AGL Energy Limited (ASX: AGL)’s Liddell and Bayswater coal-fired power stations.

Right now, the Fortescue share price is $19.17, 0.84% higher than its previous close. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is recording a 1.5% gain.

The post Why are Fortescue and green hydrogen making news again on Friday? appeared first on The Motley Fool Australia.

More reading

• Is the Fortescue share price a buy for its 16% dividend yield?
• Is the Fortescue Future Industries hydrogen dream more fantasy than feasible?
• Why is the Fortescue share price rebounding today?
• Why are ASX 200 mining shares in the green today?
• Why are ASX 200 mining share prices slipping today?

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to end a difficult week on a very positive note. At the time of writing, the benchmark index is up 1.7% to 7,059.3 points.

Four ASX shares that are climbing more than most today are listed below. Here’s why they are racing higher:

5E Advanced Materials Inc (ASX: 5EA)

The 5E Advanced Materials share price is up 11% to $3.18. This follows the release of the boron focused advanced materials company’s quarterly update. While the company posted a sizeable loss, it spoke positively about its outlook. It commented that the there is “strong demand and tight supply […] with average boric acid prices up more than 50% during CQ1 2022.”

Block Inc (ASX: SQ2)

The Block share price is up 14% to $113.75. This follows a positive night for the payments company’s US listed shares and a rebound in the tech sector. The latter has seen the S&P/ASX All Technology index charge a sizeable 5% on Friday.

Neometals Ltd (ASX: NMT)

The Neometals share price is up 11% to $1.37. This morning the battery materials company announced a cooperation agreement with Mercedes’ recycling subsidiary. Neometals will be the technology partner for the design and construction of a 2,500tpa lithium-ion battery recycling plant. Management believes the technology partnership is a strong validation of its technology.

Xero Limited (ASX: XRO)

The Xero share price is up 7% to $82.59. This morning a number of brokers spoke positively about the cloud accounting platform provider. One of those was Goldman Sachs, which has retained its buy rating with a $118.00 price target. In addition, Ord Minnett upgraded the company’s shares to a buy rating with a $97.00 price target and Citi retained its buy rating and $125.00 price target.

The post Why 5E Advanced Materials, Block, Neometals, and Xero shares are racing higher appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: Block and Xero rebound, gold miners fall
• Blast off! Why is the Zip share price zooming on Friday?
• Tech turnaround: ASX 200 tech shares surge higher on Friday
• Xero share price rebounds: Is now the time to invest?
• Why Block, IDP Education, Monash IVF, and Xero shares are dropping

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block, Inc. and Xero. The Motley Fool Australia has positions in and has recommended Block, Inc. and Xero. 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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In what must be some sweet relief for ASX investors, the S&P/ASX 200 Index (ASX: XJO) is bouncing back with a vengeance this Friday. At the time of writing, the ASX 200 is up a healthy 1.56% and back over 7,000 points. That goodwill is amplifying when it comes to the Magellan Financial Group Ltd (ASX: MFG) share price.

Magellan shares are currently up a pleasing 6.6% at $15.70 a share. Earlier today, the fund manager rose as high as $15.77, a jump of more than 7% at the time. So why are Magellan shares shooting so convincingly higher today?

Why is the Magellan share price rocketing today?

Well, we can’t be sure. Magellan hasn’t put out any news announcements today itself. However, the company did announce this week that it has finally found a replacement CEO for Brett Cairns, who left the post last year.

As we covered on Wednesday, Magellan has appointed a former investment officer at the Future Fund, David George, as its new CEO and managing director, effective 8 August.

News of the appointment initially sparked some goodwill for the Magellan share price, but the company was back in the red amid yesterday’s tumble that went through almost the entire ASX.

So perhaps today’s gains are an extension of this original positive sentiment.

Whatever the reason, today’s surge in the Magellan share price will no doubt come with some relief for investors. Even so, Magellan shares still remain down close to 10% over the past five trading days, and by more than 50% over the past six months.

At the current Magellan share price, this ASX 200 fund manager has a market capitalisation of $2.90 billion, with a trailing dividend yield of 14.3%.

The post Why is the Magellan share price up 7% today? appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: Block and Xero rebound, gold miners fall
• The Soul Patts dividend is being paid today. Here’s what you need to know
• 5 things to watch on the ASX 200 on Friday
• Why did the South32 share price beat the other ASX 200 miners today?
• 2 ASX 200 shares clocking multi-year highs on Thursday

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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ASX shares sold off yesterday, with the All Ordinaries Index (ASX: XAO) closing down 1.8%.

That came on the same day Aussie investors awoke to news of a major crypto collapse, as TerraUSD (CRYPTO: UST) – intended to be pegged to the US dollar – plunged to 30 US cents.

But the sell-off in ASX shares was caused more by the previous day’s heavy losses in US markets, along with persistent investor concerns over rising interest rates and a possible slowdown in global growth, than the crypto rout.

What’s happening with UST

As the Motley Fool reported here yesterday, crypto markets ultimately rely on investor confidence. And investor confidence in UST and Terra (CRYPTO: LUNA) – the token that’s meant to keep UST pegged right at US$1 – evaporated over the past days.

Some stablecoins are backed by fiat currencies or other crypto holdings.

Terra had several billion dollars’ worth of Bitcoin (CRYPTO: BTC) – the price varies depending on the date you value the Bitcoin – in reserve, which it’s been selling to try to support its UST dollar peg.

But the crypto was also largely reliant on LUNA to hold that peg, enabling crypto investors holding UST to swap it for US$1 worth of LUNA at any stage.

Clearly, though, none of these measures was enough.

At the time of writing, CoinMarketCap tells us that UST is down 76% over the past 24 hours, trading for 19.6 US cents. A long way from it US$1 peg.

As for LUNA, it’s gone close to zero, down 99.3% over the past 24 hours to 0.57 US cents.

Commenting on the carnage, Michael Gronager, CEO of crypto data analysis firm Chainalysis, said (courtesy of The Australian Financial Review):

What the crypto industry is learning right now is, what is enough? How much backing do you actually need to support the stablecoin? All of these projects start on a sunny day when everything works, but when the storm comes, they might break, and we find out whether they invested enough in that problem.

Could the next crypto collapse flow through to ASX shares?

ASX shares don’t appear to have been directly impacted by the crypto crash.

But next time we might not be so fortunate.

According to Gronager (quoted by the AFR):

My assessment is this won’t flow through to traditional markets this time round, but probably will next time.

Now it’s isolated to a relatively small number of people, but the more you tie up an asset class that is not protected, not well understood and doesn’t have the right transparency, then of course there’s more risk, and of course it will flow through.

Chainalysis’ own data shows a large uptick in institutional money going into crypto and DeFi projects.

“You could call that a win for crypto, but at the same time it creates another destabilising factor in markets,” Gronager said.

But, he added, “This will have compounding effects that could cause other things to happen, ideally not tomorrow, but let’s see.”

For now, ASX shares have shrugged off any concerns in the collapse of what was one of the world’s biggest cryptos by market cap. At the time of writing, the All Ords is up 1.75%.

The post Could the next crypto collapse flow through to ASX shares? appeared first on The Motley Fool Australia.

More reading

• Crypto crash: Why Bitcoin, Ethereum, and Dogecoin are struggling again
• Is this the start of a long crypto winter?
• How are Australia’s Ethereum and Bitcoin ETFs faring on their first day?
• Bitcoin price plunges below US$30,000. What’s going on?
• Why should I buy Bitcoin ETF shares instead of just buying Bitcoin?

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin and Terra. The Motley Fool Australia has positions in and has recommended Bitcoin and Terra. 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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The Virtus Health Ltd (ASX: VRT) share price is firmly nested at its previous closing price today. Typically, that would be a non-event not worth reporting on. However, today it is striking considering what the fertility treatment company reported.

Today, shareholders are scanning through Virtus’ FY22 April year-to-date trading update. Interestingly, the market is barely batting an eye at the company’s performance despite posting some weaker numbers.

As we head into the afternoon, Virtus shares are staying flat at $8.15 apiece. Meanwhile, the broader S&P/ASX 200 Index (ASX: XJO) is strutting through Friday’s session in style, sporting a 1.6% rise.

Acquisition process creates distraction

Virtus shareholders are holding the line on Friday after the company released its latest trading update. The announcement concerns the business performance for the first 10 months through to 30 April 2022.

Firstly, the good news — Virtus highlighted its belief that the underlying demand for assisted reproductive services continues.

Furthermore, the company’s IVF market share in Australia avoided erosion. Virtus pointed towards data available from Medicare that illustrates the reproductive specialist performed slightly more IVF fresh cycles in relative terms compared to the rest of the market.

However, there was some disappointing news for shareholders contained in today’s update. For instance, a few key metrics for the business all showed a decline for the 10-month period compared to the prior corresponding period. These included:

• Fresh cycle growth down 3.9%
• Revenue growth down 1.6%; and
• Earnings before interest, tax, depreciation, and amortisation (EBITDA) down 29.6%

Surprisingly, the Virtus Health share price is largely unaffected by these numbers today. Though, the company provided a caveat, stating:

As seasonality typically sees May and June contribute more strongly to profitability, the 10 months to 30 April does not necessarily represent the profile for the full year earnings.

In addition, Virtus CEO Kate Munnings said:

The team at Virtus, including fertility specialists, scientists, clinical and administration staff, have worked incredibly hard over the past 10 months to help people become parents during challenging market conditions. Despite the additional pressure of the Acquisition Process, our strategic initiatives, including our Precision Fertility Digital Platform have progressed well during FY22 and they will lay the foundation for scalable growth of Virtus Health.

What’s the outlook?

The outlook supplied for the fourth quarter, and for FY22, was relatively vague. According to Virtus, the risk of more COVID-19-related disruptions are still a concern. The byproduct of this is larger month-to-month variances than historically seen.

In turn, the company is taking steps to manage these outsized variances moving forward.

Virtus Health share price snapshot

The Virtus Health share price has been grinding higher in 2022 as BGH Capital and CapVest duke it out to acquire the company. Pleasingly, shareholders have watched on as shares have ascended nearly 21% year-to-date.

Despite the contest, Virtus is still trading on a price-to-earnings (P/E) ratio of ~24 times. This is compared to the healthcare industry average valuation of 25 times.

The post Virtus share price holds steady despite 30% earnings fall appeared first on The Motley Fool Australia.

More reading

• Could the next crypto collapse flow through to ASX shares?
• The Appen share price is charging 6% higher on Friday
• Days after TerraUSD’s shocking fall, Rival Tether is suddenly teetering
• How does the ANZ dividend compare to the other ASX 200 banks?
• Inflation to ‘peak shortly’: CBA boss says markets have priced in too many rate rises

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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Appen Ltd (ASX: APX) shares are rallying 6.5% higher on Friday, trading at $6.71 apiece at the time of writing.

After a difficult year to date – where shares have faltered more than 40% into the red – the Appen share price has levelled off somewhat in April and is now 5% higher in the past month of trade.

In wider market moves, the S&P/ASX All Technology Index (ASX: XTX) is trading 4% higher on the day as tech shares stage a small rebound.

What’s up with the Appen share price?

Tech stocks continue to take a pummelling in 2022 amid a wave of macroeconomic headwinds.

The combination of soaring inflation, commodity and food prices, rising interest rates and tension in Europe have stirred equity markets this year, and tech stocks have felt the fallout the most.

The tech index is down more than 32% this year to date and has shown no signs of reversing course. Appen is down 40% in the same time, booking extensive losses for shareholders.

Analysts at Macquarie are baking in further downside for ASX tech shares, squashing the hopes of stock pickers hoping to grab a bargain, according to earlier reporting by my Foolish colleague Brendan Lau.

Appen’s earnings were disappointing to those wanting to see a reversal in its share price. Broker JP Morgan downgraded its rating to neutral on the stock, due to the earnings miss.

The broker said in a note to clients that Appen’s 2026 target to double revenue “seems very ambitious given management’s recent track record”.

“[L]ack of visibility on growth and heightened levels of reinvestment means we would prefer to stay on the sidelines until management starts delivering on their guidance,” the broker added.

With market and broker sentiment showing a tilt towards the downside, alongside heavy weakness in the broad sector, a picture begins to form as to why Appen’s share price appears to be in trouble.

Appen share price snapshot

In the last 12 months, the Appen share price has collapsed 40% into the red after losses continued into 2022.

The post The Appen share price is charging 6% higher on Friday appeared first on The Motley Fool Australia.

More reading

• How much further can ASX 200 tech shares tumble? Macquarie weighs in
• What’s up with the Appen share price on Wednesday?
• 5 things to watch on the ASX 200 on Tuesday
• These are the 10 most shorted ASX shares
• The Appen share price is soaring 5% on Thursday. Could this be why?

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Appen Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

U.S. dollar stablecoin Tether (CRYPTO: USDT) is the largest stablecoin by market capitalization in the world and the third largest cryptocurrency period, trailing only Bitcoin and Ethereum. And on May 12, Tether did something it’s never done before. The stablecoin is supposed to always be worth $1. But during the early morning hours, it dropped to about $0.95 — a shocking drop.

Tether’s 5% deviation from its $1 peg is particularly jarring right now because of what just happened with rival stablecoin TerraUSD (CRYPTO: UST). TerraUSD lost its $1 peg a few days ago and has traded as low as $0.30 per coin. And it’s possible it will never recover.

In this article, let’s briefly look at stablecoins and what might be next for Tether and for the cryptocurrency space as a whole.

How the top five stablecoins work

According to CoinMarketCap, the top five stablecoins are Tether, USD Coin (CRYPTO: USDC), Binance USD (CRYPTO: BUSD), TerraUSD, and Dai (CRYPTO: DAI). Yes, shockingly, TerraUSD is still a top five stablecoin by market cap even though it’s only worth $0.45 as of this writing.

These stablecoins have different approaches to keeping their values at $1. Tether, USD Coin, and Binance USD keep real dollars in a bank and issue new digital coins at a one-to-one ratio.

This is probably the most intuitive way to build a stablecoin. However, the cryptocurrency community has been reluctant to embrace this approach. After all, what’s the point of all of this if we still need real dollars at the end of the day? That’s why Dai and TerraUSD approached the problem from different angles.

With Dai, users deposit cryptocurrencies like Bitcoin into vaults using The Maker Protocol from MakerDAO. Once deposited, new Dai is created. But there’s supposed to be more collateral in vaults than Dai in circulation. This absorbs volatility in the underlying collateralized cryptocurrencies and the system has historically worked ok — in times of extreme volatility Dai has deviated from its peg, but it’s always managed to regain its $1 value.

Finally, we come to TerraUSD. This stablecoin attempted to control supply to always meet demand. More TerraUSD could enter and leave circulation based on demand by swapping it with Luna. This algorithmic stablecoin was an attempt to be fully decentralized.

Why TerraUSD failed

As mentioned, Tether recently started teetering. But it all started with TerraUSD.

People were putting their money into TerraUSD largely because of the high yield they could get for holding it through the Anchor Protocol. The annual percentage yield (APY) is about 20% — extremely generous. However, according to DefiLlama, roughly $2.2 billion of TerraUSD was withdrawn from Anchor in 48 hours (May 7 through May 9) while the price of TerraUSD was still near $1.

This quickly flooded the market with TerraUSD coins. Ideally, users would have burned TerraUSD coins and exchanged them for Luna tokens to remediate the sudden supply and-demand imbalance. However, Luna was also falling hard at the time, demotivating users to exploit the arbitrage opportunity. And once this tandem downward spiral started, it couldn’t recover. Luna has dropped 99% in value and TerraUSD hasn’t been within 1% of its peg in almost four days.

There’s much more to this story. But the point is, TerraUSD seems to have failed. And, more broadly, the market has lost total faith in the algorithmic stablecoin system. Consider that Neutrino USD and Waves is a similar algorithmic approach to stablecoins like TerraUSD and Luna. But Neutrino USD is also off of its peg and Waves token has dropped in value.

Some suggest that what happened with TerraUSD was a premeditated attack and there’s some evidence of that. However, whether or not someone intentionally flooded the market to shake confidence in the system, the fact is it did happen. And if it happened once, it could happen again.

What’s next for Tether

Now we finally come to Tether. During the early morning hours, Tether dropped from its peg. It’s hard to decipher exactly what’s going on but here’s one data point: Curve allows people to exchange cryptocurrencies and its liquidity pool is supposed to be perfectly balanced between Dai, USD Coin, and Tether. As of this writing, Curve is 82% Tether, suggesting people are exchanging it for Dai and USD Coin in masse.

Whether or not someone is behind this isn’t the point. The point is confidence in Tether appears to be shaken and it lost its peg as a result.

Unlike TerraUSD, Tether holders have options if it loses its peg. Since it’s supposed to be backed by real dollars, holders can redeem them. According to the Tether team, $300 million has already been redeemed directly and it’s on track to process a whopping $2 billion so far.

These redemptions are perhaps calming panic and restoring confidence to Tether. As I write, its price has climbed back to within 1% of $1. And the crypto community is certainly breathing a collective sigh of relief. The crypto market is rife with leverage — something I don’t recommend using for investing in stocks or cryptocurrencies. If Tether falls like TerraUSD, it could set off a chain reaction of margin calls to the detriment of the entire space.

Many have questioned Tether’s reserves in the past and predicted a doomsday scenario if what’s happening today actually happened. So far, Tether is mostly holding up against the extreme market volatility. But it looks like the situation is far from over. Therefore, cryptocurrency investors should be watching for further developments with extreme interest. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Days after TerraUSD’s shocking fall, Rival Tether is suddenly teetering appeared first on The Motley Fool Australia.

More reading

• The Appen share price is charging 6% higher on Friday
• How does the ANZ dividend compare to the other ASX 200 banks?
• Inflation to ‘peak shortly’: CBA boss says markets have priced in too many rate rises
• Why is the CSR share price lagging the ASX 200 on Friday?
• Electro Optic Systems share price edges higher on government win

Jon Quast has positions in Bitcoin and Ethereum. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin and Ethereum. The Motley Fool Australia owns and has recommended Bitcoin and Ethereum. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The big four ASX bank Australia and New Zealand Banking Group Ltd (ASX: ANZ) is expected to pay a large dividend yield in FY22. But how big? And how does it compare to the other large banks?

ANZ is one of the largest banks in Australia and New Zealand, alongside Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd. (ASX: NAB) and Westpac Banking Corp (ASX: WBC).

How big is the ANZ dividend yield?

ANZ recently announced its FY22 half-year result. Continuing operations cash net profit after tax (NPAT) fell by 3% to $3.11 billion, while the cash profit before credit impairments, tax and ‘large items’ fell by 10% to $4.14 billion.

The ANZ board decided to pay a dividend per share of 70 cents, which was the same as the FY21 second half dividend.

According to Commsec, ANZ is forecast to pay an annual dividend per share of $1.44. That translates into a projected grossed-up dividend yield of 8.1%.

Citi is expecting ANZ to pay a slightly larger dividend than the Commsec prediction. The broker expects the projected grossed-up dividend yield to be 8.25% in FY22.

How large will the other big bank dividends be?

Citi’s numbers suggest that CBA is going to pay an annual dividend per share of $3.85 in FY22. That would be a grossed-up dividend yield of 5.4%.

Next, NAB is predicted to pay an annual dividend per share of $1.50, equating to a grossed-up dividend yield of 6.9% according to Citi.

Finally, Citi thinks that Westpac is going to pay an annual dividend per share of $1.23. That would translate into a grossed-up dividend yield of 7.3%.

Based on the above estimates, that means ANZ is expected to pay the largest dividend yield in FY22.

Are ANZ dividends expected to grow?

Commsec numbers certainly suggest there could be dividend growth for the next few years.

The forecast is an annual dividend per share of $1.55 in FY23 and then $1.65 per share in FY24. That would mean that ANZ could pay a grossed-up dividend yield of 8.7% in FY23 and 9.3% in FY24.

However, dividends are up to the discretion of the board, which can take into consideration things like profitability, the economic environment and how much capital the business has.

Is the ANZ share price a buy?

Citi certainly thinks so, with a buy rating and a price target of $30.75. That implies a potential rise of around 20%.

The broker thinks that increasing interest rates will help ANZ’s profit and dividend grow in the next couple of years.

In my own opinion, it’s hard to say how things will go for ANZ (and other banks). Rising interest rates are likely to be a positive, but competition could remain a headwind for margins and there is also a possibility that higher interest rates could lead to higher arrears.

The post How does the ANZ dividend compare to the other ASX 200 banks? appeared first on The Motley Fool Australia.

More reading

• What’s the outlook for ASX 200 bank shares amid rising interest rates?
• Is the ANZ share price a buy and a dividend opportunity?
• Why is the ANZ share price sliding on Monday?
• Is it too late to buy big bank ASX shares?
• Top brokers name 3 ASX shares to buy next week

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking Corporation. 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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Concerned about rising mortgage costs?

You’re not alone.

But Commonwealth Bank of Australia (ASX: CBA) CEO Matt Comyn has some calming words for homeowners and investors worried about fast-rising interest rates following the Reserve Bank of Australia’s hike in the official cash rate last week.

The cash rate went from a historic 0.10% to the current 0.35%, the first increase in more than a decade,

The bond market is forecasting the RBA will ratchet up the cash rate to 2.50% by December with the rate hitting 3.00% next year. That would see monthly mortgage payments increase to levels that will squeeze many household budgets.

But Comyn says CBA’s own forecast is for a significantly smaller increase in the cash rate, believing that inflation levels are about to peak.

What is CBA forecasting for rates?

As the Australian Financial Review reports, CBA’s own interest rate forecasts are far more modest. The bank predicts the cash rate will reach 1.35% by December and level out around 1.60% in mid-2023.

“The speculation about a cash rate the market is pricing in is, in our view, much higher than what is going to unfold,” Comyn said.

According to Comyn (quoted by the AFR):

That is a very big difference in terms of interest rate normalisation. Our clear view is the inflation level is probably going to peak shortly, and inflation is a lagging indicator.

Our central view is we won’t need as much tightening for monetary policy to manage inflation over course of next 12 to 18 months as the market is pricing in. We think, say, four cash rate hikes over the course of the next six months will have a slowing effect and do their job to actually cool demand in the domestic economy.

If CBA has this one right, overstretched homeowners and property investors can breathe a little easier.

How has the big bank been tracking?

CBA released its third-quarter results yesterday, reporting a cash profit of $2.4 billion, flat when compared to the first half quarterly average.

Still, the healthy profit helped CBA shares close up 0.6% yesterday even as the S&P/ASX 200 Index (ASX: XJO) closed 1.7% lower.

The post Inflation to ‘peak shortly’: CBA boss says markets have priced in too many rate rises appeared first on The Motley Fool Australia.

More reading

• Broker says the CBA share price is expensive and a sell
• 5 things to watch on the ASX 200 on Friday
• Why CBA, Incannex, Judo Capital, and Orica shares are rising
• ASX 200 midday update: CBA’s Q3 update impresses, Xero and Block crash
• CBA share price pushes higher on consensus-beating quarterly update

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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The CSR Limited (ASX: CSR) share price is trading down today, currently 0.77% lower at $5.13. However, in early trade, it sank as low as $5.01.

Meanwhile, the benchmark S&P/ASX 200 Index (ASX: XJO) is trading 1.3% higher at 7,043 in today’s session.

Brokers weigh in on CSR

While there’s been no market-sensitive updates out of the building products manufacturer today, the company did incur a number of downward revisions to its stock rating.

First, Macquarie analysts led by Peter Steyn sliced the broker’s outlook on CSR to neutral following the release of its FY22 results this week.

It said the company’s growth cycle is “maturing” and that “the macro context is getting harder”, making it difficult for the CSR share price to appreciate.

In a note, the broker said that “[p]roperty is playing a bigger role in the group’s valuation now, but we believe the downside risk on multiples in Building Products is still distinct”.

“[T]he downside risk is focused on macro deterioration as rates rise.”

Macquarie sliced its price target by 11% to $6.05 per share in its downgrade, joining Jefferies, which reduced its target by 16% to $5.90 per share.

Analysts at Jefferies led by Simon Thackray also reduced the broker’s rating from a buy to hold, citing reasons of capital management during COVID-19.

Basically the broker thinks CSR should have been more proactive during the pandemic in its investments, and as such, is playing “[capital expenditure] capex catch up”.

It notes CSR is guiding a capex of $140–$170 million in its FY23 estimates, a trend that Jefferies thinks could continue into FY24.

Still, 75% of analysts covering CSR advocate to buy the stock right now, according to Bloomberg data. The consensus price target from all analysts is $6.35 per share.

CSR share price snapshot

In the last 12 months, the CSR share price has fallen 14% into the red. It has also collapsed 15% this year to date.

The post Why is the CSR share price lagging the ASX 200 on Friday? appeared first on The Motley Fool Australia.

More reading

• Why is the CSR share price plunging 9% today?
• CSR share price lifts as company constructs 20% more profit
• Do CSR shares have a dividend reinvestment plan?
• Is the CSR share price fully valued in April 2022?

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. 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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