Why is the Core Lithium share price cratering 8% today?

It’s been a brutal day for the Core Lithium Ltd (ASX: CXO) share price this Thursday. At the time of writing, Core Lithium shares have lost a painful 8.41%, falling from $1.16 at market close yesterday to the $1.067 a share that we currently see.

The S&P/ASX 200 Index (ASX: XJO) is also having a rough day. But it still looks peachy by comparison, ‘only’ down by 0.5% at present.

Core Lithium has still had an incredible year. Despite some major falls recently (including today’s), Core Lithium shares remain up by more than 68% in 2022 thus far:

But what’s going on with Core Lithium that would prompt investors to send this ASX 200 lithium producer down by more than 8% today?

Well, it has nothing to do with anything out of the company itself. Core Lithium has made no ASX announcements since 5 December.

So it looks as though Core Lithium shares have taken the brunt of the pessimism that the markets are feeling today over the recent decision of the US Federal Reserve. As we covered this morning, the US Fed decided to hike American interest rates by 0.5% overnight to a target range of 4.25% to 4.5%.

What really seems to have rattled investors though is Fed chair Jay Powell’s hawkish comments that, “It is our judgment today that we are not at a sufficiently restrictive policy stance yet. We will stay the course until the job is done”.

Higher interest rates are not good for shares in general. But they are especially damaging to the prospects of companies that are priced on their future prospects. That arguably includes Core Lithium.

Bad news all around for lithium shares

Further, we got the news this morning that Core Lithium’s fellow lithium share Pilbara Minerals Ltd (ASX: PLS) received softer-than-expected prices for its latest lithium auction. Not exactly inspiring stuff for the ASX lithium space.

Pilbara was also recently the subject of some tough love from an ASX broker. As my Fool colleague James covered this morning, ASX broker Morgans has just indicated that it thinks the Pilbara share price may be close to peaking.

So we see to have a perfect cocktail of negative news for lithium shares like Core Lithium today. Therefore it’s perhaps no wonder that the Core Lithium share price has taken such a beating.

The post Why is the Core Lithium share price cratering 8% today? appeared first on The Motley Fool Australia.

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More reading

• Can you time the stock market with ASX value investing?
• Why are ASX 200 lithium shares sinking like stones on Thursday?
• Is Qantas stock a cheap ASX 200 buy right now?
• ASX 200 shares slump amid Fed 5% fears
• Here are the old and new energy ASX 200 shares that investors were buying last month

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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