ASX lithium shares take a beating on Friday

ASX lithium shares are taking a beating today.

Granted, it’s a tough day on the market overall.

In afternoon trading the All Ordinaries Index (ASX: XAO) is down 1.5%.

But energy and metals mining stocks – of which ASX lithium shares arguably have a footprint in each – are doing it tougher.

This sees the S&P/ASX 300 Metals & Mining Index (ASX: XMM) down 2.5% while the S&P/ASX 200 Energy Index (ASX: XEJ) is down 4.1% at this same time.

How are ASX lithium shares holding up?

ASX lithium shares have been among the top performers in 2022.

But not today.

At the time of writing here’s how these stocks are holding up:

• Allkem Ltd (ASX: AKE) shares down 4.0%
• Core Lithium Ltd (ASX: CXO) shares down 6.0%
• Pilbara Minerals Ltd (ASX: PLS) shares down 3.0%
• Lake Resources N.L. (ASX: LKE) shares down 2.7%

Not that you should break out your tiny violin for long-term ASX lithium shareholders quite yet!

Here are the returns from these same stocks over the past 12 months:

• Allkem Ltd (ASX: AKE) shares up 60%
• Core Lithium Ltd (ASX: CXO) shares up 207%
• Pilbara Minerals Ltd (ASX: PLS) shares up 95%
• Lake Resources NL (ASX: LKE) shares up 79%

That compares to a 10% full-year loss posted by the All Ordinaries.

So, after all this outperformance, what’s going on?

Why the big Friday fire sale?

Lithium prices are flat over the past day and remain up 4% over the month and a whopping 242% over 12 months.

So, we can’t point the finger of blame there.

Instead, it looks like another rough day of selling in US markets – with futures pointing to more pain tomorrow (overnight Aussie time) – is pressuring shares across the board.

That fall was driven by inflation figures in the world’s largest economy coming in 0.1% higher in August than the numbers reported in July, while the market had largely priced in lower inflation.

This means investors can expect more hawkish tightening from the US Federal Reserve. And higher rates are particularly onerous to growth shares, like many lithium stocks, which are priced with future earnings in mind.

ASX lithium shares are also taking a harder fall in part because they have outperformed so strongly. Some profit taking is likely taking place today as investor sentiment again turns more risk averse.

The post ASX lithium shares take a beating on Friday appeared first on The Motley Fool Australia.

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More reading

• Why is the Pilbara Minerals share price in reverse today?
• Why is the Lake Resources share price tumbling again?
• Why is the Core Lithium share price sliding 4% today?
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• Why Lake, Pushpay, South32, and Tyro shares are dropping

Motley Fool contributor Bernd Struben 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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