Day: 4 May 2023

The S&P/ASX 200 Materials Index (ASX: XMJ) is rising 1.29% today, but this ASX mining stock is charging far higher.

The Caspin Resources Ltd (ASX: CPN) share price gained 61% to hit an intraday high of 47.5 cents. It’s currently settled at 37.5 cents a share, up 27.1%.

Let’s take a look at what this ASX mining stock has discovered.

What’s going on?

Caspin advised the market today it has made a “ground breaking” rare earths discovery at the Mount Squires Project in Western Australia.

The company observed significant rare earth element mineralisation at the project, located in the West Musgrave region of the state.

Assay results showed:

• 46m at 0.71% TREO (total rare earth oxides) from 32m including 1.25% TREO from 48 metres at hole MSAC0141
• 19m at 0.41% TREO from surface including 4m at 0.80% TREO from 8m at drill hole MSAC0224
• 7m at 0.32% TREO from surface including 2m at 0.57% TREO from 5m to EOH at drill hole MSAC0130
• 10m at 0.14% TREO from 36m at drill hole MSAC0139

The company noted a high proportion of heavy (dysprosium and terbium) and light rare earth elements (neodymium and praseodymium).

This may be the first discovery of “significant rare earth element” mineralisation in the West Musgrave region, according to Caspin.

Commenting on the news, CEO Greg Miles said:

This is a sensational discovery given the tiny scale of the assay program. The Company has long recognised the conceptual potential for rare earth mineralisation at the Mount Squires Project, but given the more obvious prospectivity for nickel, copper and gold this potential had not been investigated until now.

We’ve now made a significant rare earth discovery, of a relatively unique style in Australia, in a province with no previous systematic exploration for rare earths

The company has so far assayed 37 samples from four holes and there are further results pending. The next drill program will test extensions and enable the company to gather samples for metallurgical test work.

Share price snapshot

Today’s news is a welcome boost. The Caspin Resources share price has shed 49% in the last year.

This ASX mining stock has a market capitalisation of about $34.9 million based on the latest share price.

The post Guess which ASX mining stock is rocketing 27% on a ‘ground breaking rare earth discovery’ appeared first on The Motley Fool Australia.

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More reading

• ‘Additional growth options’: Why the Northern Star share price is flying today
• 3 ASX ETFs cracking new 52-week highs on Thursday
• ASX 300 lithium stock Vulcan Energy halted amid cap raise
• Woodside share price lifts amid wild oil price swings today
• What’s the outlook for the Pilbara Minerals share price in May?

Motley Fool contributor Monica O’Shea 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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The Northern Star Resources Ltd (ASX: NST) share price is up 2.88% in afternoon trade.

Shares in the S&P/ASX 200 Index (ASX: XJO) gold stock closed yesterday trading for $13.55. Shares are currently changing hands for $13.94 apiece.

This comes despite a 0.16% intraday decline in the ASX 200, with some stocks feeling the pinch following the latest interest rate hike from the US Fed.

The Northern Star share price, however, looks to be getting a boost on two fronts today.

First, the gold price is on a tear.

On Monday, bullion was trading for US$1,982.56, according to data from Bloomberg.

After another overnight boost, today that same ounce is trading for US$2,042.15, a gain of more than 3%.

And the Northern Star isn’t the only gold stock rising alongside the yellow metal.

The S&P/ASX All Ordinaries Gold Index (ASX: XGD) is up 2.1% today.

What else are ASX 200 investors considering?

The second tailwind for the Northern Star share price today looks to be related to the miner’s Annual Mineral Resource and Ore Reserve update for the 12 months ending 31 March.

The company’s gold mines are located in Western Australia and the US state of Alaska.

Likely piquing investor interest, the ASX 200 gold stock reported a 3.5 million ounce increase in its mineral resource to 57.4 million ounces.

The miner said this growth underscores the value of the investments in its sustained exploration program.

The increased mineral resource offset mine depletion and divestments over the year, leaving the total ore reserve stable at 20.2 million ounces.

Northern Star said it had also slightly increased its “conservative long-term gold price assumptions” to reflect increased costs across the sector.

Commenting on the results helping drive the Northern Star share price higher today, managing director Stuart Tonkin said:

Northern Star’s three production centres – Kalgoorlie, Yandal and Pogo – come with incredible and genuine world-class mineral endowments that provide us with the confidence to plan organic and profitable growth of the company’s production footprint.

Tonkin highlighted the Kalgoorlie district, where he said the Hercules discovery provides “a good example of this type of new find that will provide us with additional growth options”.

Northern Star share price snapshot

The Northern Star share price has been a strong outperformer over the past 12 months, up 48%. So far in 2023, the ASX 200 gold stock has gained 26%.

The post ‘Additional growth options’: Why the Northern Star share price is flying today appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Why are ASX 200 gold shares going gangbusters today?
• 5 things to watch on the ASX 200 on Wednesday
• 5 things to watch on the ASX 200 on Monday
• 2 ASX 200 gold stocks just downgraded by brokers (and one upgraded)

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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It’s a good day to be invested in these three ASX exchange traded funds (ETFs) as they surge to trade at their highest prices in more than a year.

Eagle-eyed investors might notice a common theme between them.

3 ASX ETFs posting 52-week highs today

The Global X Physical Gold (ASX: GOLD) unit price soared 2.2% earlier today to peak at a record high of $28.65.

Meanwhile, that of Betashares Gold Bullion ETF – Currency Hedged (ASX: QAU) jumped 2.1% to reach $17.61 – the highest it’s been in nearly two years.

Simultaneously, the unit price of Global X Physical Silver (ASX: ETPMAG) soared 2.5% to a near-12-year high of $36.17 this morning.

As the name suggests, the three ETFs are backed by physical holdings of precious metals. They seek to provide returns correlated to the prices of either gold or silver bullion.  

What’s driving the funds sky high?

The value of the two metals has been soaring lately amid what appears to be continued concerns of inflation and rising interest rates. Not to mention, worries of broader economic stability.

Such concerns are likely turning investors towards traditional inflation hedges and safe haven assets like gold and silver.

The United States Federal Reserve hiked interest rates in the globe’s largest economy by 0.25% overnight. Its offical rate now sits in the range of 5% to 5.25%. It follows the broadly surprising 0.25% hike instigated by the Reserve Bank of Australia earlier this week. That brought our official cash rate to 3.85%.

Additionally, the banking crisis that took the world by storm in March has reared its head once more.

Shares in PacWest Bancorp (NASDAQ: PACW) are down more than 50% in after-hours trade after Bloomberg reported the bank is weighing its options, including a sale, following the collapse of rival lenders. That may have made gold and silver more attractive to risk-averse investors, as it did earlier this year.

The going rate of silver hit a 12-month high of US$26.16 an ounce overnight, according to CNBC. It’s a similar story for gold, which is nearing its April high, peaking at around US$2,085 an ounce.

Of course, that’s good news for the unit price of the three ASX ETFs and those invested in them.

The post 3 ASX ETFs cracking new 52-week highs on Thursday appeared first on The Motley Fool Australia.

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More reading

• Say hello to the ASX’s newest ETF
• I’d buy and hold these 2 ASX shares to cash in on a surging gold price
• Top ASX ETFs to buy in April 2023

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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Vulcan Energy Resources Ltd (ASX: VUL) shares are going nowhere today after the company requested a trading halt and announced a capital raising.

The S&P/ASX 300 Index (ASX: XKO) lithium stock is frozen at yesterday’s closing price of $6.16.

Vulcan aims to become the world’s first lithium producer with a net zero carbon footprint, using no fossil fuels in its production.

It also aims to co-produce mass-scale renewable geothermal energy to contribute to Europe’s decarbonisation.

Let’s look at the details of the capital raising.

ASX 300 lithium share halted amid $109 million cap raise

Vulcan shares remain frozen amid the company launching a fully underwritten single-tranche placement to sophisticated and institutional investors to raise $109 million.

Vulcan will issue 21.4 million new fully paid ordinary shares at $5.10 per share. This represents a 17.2% discount to the last traded price of $6.16.

Placement proceeds will be used to buy long lead items for the construction of phase one of its Zero Carbon Lithium Project in Germany’s Upper Rhine Valley, as well as other purposes.

Vulcan hopes to commence phase one operations and production by the end of CY25.

Vulcan released an equity presentation and a copy of its international offering circular today.

The new Vulcan shares will commence trading on 15 May.

What else is going on with Vulcan shares?

Vulcan released its March quarter activities report and cash flow report, as well as a corporate presentation, last week.

Vulcan shares rose 3.8% on the reports.

Vulcan finished the quarter with 112 million euros in cash and equivalents, with funding for 10.2 quarters ahead.

The highlight of the quarter was the completion of Vulcan’s definitive feasibility study (DFS) for phase one of its commercial development.

This follows two years of successful operations at its pilot plant, proving its processes can produce lithium with zero fossils and a net zero carbon footprint.

The company says 2023 will be a “transformational year at Vulcan”.

Vulcan will conduct its annual general meeting in Perth on 29 May.

The post ASX 300 lithium stock Vulcan Energy halted amid cap raise appeared first on The Motley Fool Australia.

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More reading

• Woodside share price lifts amid wild oil price swings today
• What’s the outlook for the Pilbara Minerals share price in May?
• Why did the Coles share price underperform the ASX 200 Index in April?
• Are AGL shares the most underrated ASX 200 stock opportunity?
• NAB shares dive 8% as EPS downgrades expected

Motley Fool contributor Bronwyn Allen 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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The Woodside Energy Group Ltd (ASX: WDS) share price is up 0.66% today.

Shares in the S&P/ASX 200 Index (ASX: XJO) oil and gas stock closed yesterday trading for $32.63. Shares are currently changing hands for $32.845 each.

That’s quite a strong performance from the Woodside share price today after crude oil prices fell again overnight, marking the third consecutive day of losses.

The drop in WTI and Brent Crude oil prices sent both crude benchmarks down to their lowest levels in more than a year.

Brent crude fell to US$71.64 per barrel overnight, down 10% from the US$79.31 per barrel it was trading for on Monday.

Though even as I pen this, crude looks to be rebounding.

Brent is currently trading for US$73.29, which would explain the support for the Woodside share price today.

Why is the oil price under pressure?

Less than a month ago, on 12 April, Brent crude was trading for US$87.33 per barrel. At that time, the Woodside share price stood at $34.52.

The oil price has come under pressure since then amid growing concerns about a potential global recession, which would see reduced energy demand from consumers and businesses.

Nor has the big boost in energy demand expected from China’s reopening panned out in line with bullish expectations.

On the supply side, the recently announced supply cuts from OPEC+ have so far failed to boost oil prices. That’s in part due to Russia, whose oil exports remain elevated despite global sanctions and the nation’s pledge to its OPEC partners to cut output.

And in the world’s biggest economy, the US Energy Information Administration reported an increase in fuel supplies and lower petrol demand.

“The most notable thing is that gasoline demand gave back all of the increases that we’d seen in previous weeks,” president of Lipow Oil Associates Andrew Lipow said (as quoted by Reuters).

As if that wasn’t enough to pressure the oil price, the US Fed increased interest rates yet again yesterday, raising concerns of an economic downturn and diminished demand.

Yet, while that sees the ASX 200 in the red today (down 0.17% at the time of writing), the Woodside share price remains resilient.

What’s next for oil and the Woodside share price?

As the world’s most watched central bank, the Fed has a lot of influence on future oil prices.

One of the positive notes that emerged yesterday was that the Fed omitted its previous language saying it anticipated further interest rate hikes ahead. Instead, the Fed now said it “will closely monitor incoming information and assess the implications for monetary policy”.

That could see the oil price move higher, according to Price Futures Group analyst Phil Flynn. This would offer further tailwinds for the Woodside share price.

“The Fed going into a pause mode should be very supportive for the price of oil,” Flynn said.

And while Morgan Stanley lowered its forecast for Brent prices to US$75 a barrel by the end of 2023, that’s still above current levels.

According to Morgan Stanley (courtesy of Reuters):

Downside risk to Russia’s supply and upside risk to China’s demand have largely played out and prospects for 2H tightness have weakened.

The post Woodside share price lifts amid wild oil price swings today appeared first on The Motley Fool Australia.

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More reading

• Why Amcor, oOh!Media, Ramsay, and Woodside shares are falling today
• What went down for the Woodside share price in April?
• Worried about the market? 2 ASX dividend stocks that could help you sleep at night
• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 energy shares to fall after oil prices collapse

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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The Pilbara Minerals Ltd (ASX: PLS) share price is in the green year to date, but what is the outlook in May?

Pilbara shares have risen 13% since the start of the year and are now trading at $4.245. In today’s trade, Pilbara shares are up 1.07%.

Let’s take a look at the outlook for the Pilbara share price.

What’s ahead?

Pilbara’s share price in May could be impacted by a variety of factors including the lithium price, any price-sensitive updates from the company and broker coverage.

Pilbara produces lithium from its 100% owned Pilgangoora Project, near Port Hedland in Western Australia’s Pilbara region.

The company is increasing production capacity at the mine with an aim of producing 1 million tonnes per annum by 2025.

Analysts at Macquarie have recently placed an outperform rating on Pilbara shares with a $7.70 price target. This implies an upside of 81% based on the current share price.

The team at Macquarie noted the miner is delivering plenty of free cash flow from its operations. Macquarie is also predicting Pilbara’s dividend could be 42 cents per share in FY 2023.

Outlook for the lithium price will depend on demand and supply. Chile has recently announced a policy to nationalise lithium, which may impact supply from the country.

Commenting on the outlook for lithium in a recent report, ANZ commodity strategists Daniel Hynes and Soni Kumari said:

The outlook for the EV sector remains strong. We expect these latest supply side issues to reignite supply concerns, leading to a rebound in prices.

US lithium producer Livent Corp (NYSE: LTHM) recently expressed optimism on the lithium price during a quarterly conference call. Livent CEO Paul Graves sees strong demand for lithium “outside China, especially in Japan and South Korea”, Reuters reported. He said:

The spot market in China is not reflective of the entire market. We have not reduced our lithium demand expectations for 2023.

We are absolutely not demand constrained, but we are absolutely supply constrained.

Pilbara reported a cash balance of $2.6 billion in the March quarter, up 21% on the previous quarter. Shipments fell 3% to 144,312 dry metric tonnes of spodumene concentrate. The company declared a maiden fully franked interim dividend of 11 cents per share.

Pilbara Minerals share price snapshot

The Pilbara Minerals share price has returned 61% in the past year.

Pilbara has a market cap of about $12.73 billion based on the latest closing share price.

The post What’s the outlook for the Pilbara Minerals share price in May? appeared first on The Motley Fool Australia.

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More reading

• 2 ASX 200 lithium shares to buy for $100 monthly passive income each
• Here are the top 10 ASX 200 shares today
• Why Flight Centre, Jumbo, Pilbara Minerals, and Ramelius shares are charging higher
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• What’s the forecast for the lithium price in May?

Motley Fool contributor Monica O’Shea 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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The S&P/ASX 200 Index (ASX: XJO) had a fairly decent month last month. Over April, the ASX 200 rose from 7,177.8 points to 7,309.9 points – a rise of 1.8%. But let’s talk about the Coles Group Ltd (ASX: COL) share price. 

Coles shares started last month at $18.02 a share. But by the close of trading on 28 April, the Coles share price was up to $18.20. That’s a gain of exactly 1%. Not a bad return, all things considered. But it still leaves Coles as a market loser over April:

So what happened with Coels shares last month that might explain why the ASX 200 came out on top?

Why did the Coles share price lose out to the ASX 200 in April?

Well, there were a few developments that are worth covering. Firstly, in early April, Coles announced that it would be acquiring two automated milk processing facilities, one in New South Wales, and one in Victoria. It announced the $105 million purchase from Saputo Dairy Australia on 3 April. Investors responded positively at the time.

Coles was also the beneficiary of some ASX broker love last month. On 19 April, we took a look at broker Morgans’ positive view on the Coles share price. The broker gave Coles an add rating, with a 12-month share price target of $19.60. It also predicted that the grocery giant will continue to lift its dividends well into FY2024.

But perhaps the biggest piece of news out of Coles in April was the third-quarter sales report that the company revealed on 28 April.

As we covered, this saw Coles announce that total group sales revenue for the period between 2 January and 26 March rose 6.5% over the previous year to $9.67 billion. Coles’ supermarket, liquor and eCommerce sales all grew over the period too, with an impressive 28.9% rise in online liquor sales.

All in all, it looks like it was all good news for Coles over April. So why were investors hesitant to push Coles shares to a market-beating position last month? Well, there’s no easy answer. But consider that the Coles share price remains up around 10% year to date in 2023 so far.

In stark contrast, the ASX 200 has only gained around 3.3% this year. Since Coles has tripled the gains of the broader market in 2023, investors might forgive the small market underperformance it recorded last month.

At the current Coles share price, this ASX 200 blue chip share has a market capitalisation of $24.18 billion, with a dividend yield of 3.65%.

 

The post Why did the Coles share price underperform the ASX 200 Index in April? appeared first on The Motley Fool Australia.

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More reading

• The US Fed just lifted rates again. Here’s how the ASX 200 is responding today
• 4 reasons to buy ASX 200 banks stocks right now
• Top ASX passive income shares to buy in May 2023
• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX 200 shares today

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 positions in and has recommended Coles Group. 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 AGL Energy Ltd (ASX: AGL) share price has dropped by around 60% since February 2020. It has been one of the worst S&P/ASX 200 Index (ASX: XJO) stocks over that period.

AGL is an ASX energy share that is facing turbulent times as it looks to succeed in a world that is decarbonising.

It’s a tricky situation for the business because not only is it planning to close its coal power plants, but it’s also planning to invest heavily in renewable energy and batteries to replace that lost power generation, which could take a lot of capital.

But, sometimes the market can be overly pessimistic about a company, which could mean the AGL share price is a contrarian opportunity.

Low earnings expected in FY23

AGL reported a statutory loss of $1.08 billion in the first half of FY23, including $706 million of impairment charges (after tax) because of its accelerated decarbonisation plan.

The FY23 half-year underlying earnings before interest, tax, depreciation and amortisation (EBITDA) was $604 million, down 16%. Underlying net profit after tax (NPAT) dropped 55% to $87 million.

In FY23, the ASX 200 stock is expecting underlying EBITDA to be between $1.25 billion to $1.375 billion while underlying NPAT is guided to be between $200 million to $280 million.

But, AGL has provided commentary that the outlook beyond FY23 remains positive.

The company recently said with its HY23 result that wholesale electricity pricing “remains elevated compared to prior periods with AGL expected to benefit as historical contract positions are reset in FY24 and FY25. Additional, sustained periods of higher wholesale electricity prices are expected to flow through to retail pricing outcomes, and the Torrens Island and Broken Hill batteries are anticipated to commence operations in mid-2023.”

Is the AGL share price good value considering future earnings?

Earnings per share (EPS) could soar in FY24 and FY25, according to the current estimates.

Forecasts on Commsec currently suggest possible EPS of 83.5 cents in FY24 and 97 cents in FY25.

Those estimates put the AGL share price at 10 times FY24’s estimated earnings and 9 times FY25’s estimated earnings.

For a defensive sector like energy retailing, I think the above price/earnings (P/E) ratios look quite low for the ASX 200 stock. It wouldn’t surprise me to see the AGL share price rise by at least another 20% over the next 15 months.

On top of that, the business is expected to pay an annual dividend per share of 56.3 cents in FY24, according to Commsec, which would be a dividend yield of 6.5%. The dividend could then grow to 70 cents per share, which would be a dividend yield of 8.1%.

The business is advancing its planned 500 MW Liddell battery and 250 MW, 8-hour storage for Muswellbrook pumped hydro.

I think the promising earnings rebound in the short term and the plan to invest in renewable energy generation make AGL a compelling contrarian idea.

The post Are AGL shares the most underrated ASX 200 stock opportunity? appeared first on The Motley Fool Australia.

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More reading

• 6 excellent ASX 200 dividend shares that aren’t banks or miners
• Here’s how much I would need to invest in AGL shares to achieve $150 in monthly income
• 3 things that could tank the AGL share price
• Bought $3,000 of AGL shares 5 years ago? Guess how much passive income you’ve earned since
• Here are the top 10 ASX 200 shares today

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 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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National Australia Bank Ltd (ASX: NAB) shares are plummeting on Thursday. In fact, the big four bank’s stock is trailing the entire S&P/ASX 200 Index (ASX: XJO) right now.

It follows the release of the bank’s first-half earnings, wherein it revealed a record profit. Though, its performance didn’t live up to expectations.

The NAB share price is currently down 7.6% at $26.38.

Now, one top broker reportedly expects consensus forecasts on NAB’s earnings per share (EPS) to be revised downwards.

NAB shares trail ASX 200 on earnings release

NAB shares are suffering on the release of the bank’s earnings for the six months ended 31 March. As my Fool colleague James reported earlier, its results disappointed Goldman Sachs.

Now, UBS has weighed in, saying the bank posted a “weaker than expected” net interest margin (NIM) for the period, as per The Australian.

NAB’s NIM climbed to 1.77% last half – helped by a barrage of interest rate hikes put forward by the Reserve Bank of Australia (RBA). However, an increase in home lending competition and higher funding costs offset some of the benefits.

Meanwhile, its statutory net profit rose to around $4 billion and its dividend was upped to 83 cents per share.

The publication quoted UBS analyst John Storey as saying:

The standout for us was NIM only rising 10 basis points versus the previous half year with NAB calling out peaking NIM in Dec22 of 1.79%, with a [second quarter] exit NIM of 1.76%.

This result in our view confirms consensus is likely to revise EPS down further.

But it wasn’t all bad news. NAB noted consumption and growth in the Australian economy are starting to soften, with inflation also appearing to moderate – meaning interest rates are likely at or around their peak.

It also stated that it looks more and more likely that Australia could dodge a “pronounced economic correction”.  

The NAB share price is now 10% lower than it started the year. It has also fallen 18% since this time last year. Comparatively, the ASX 200 has risen 3% year to date and has fallen 2% over the last 12 months.

The post NAB shares dive 8% as EPS downgrades expected appeared first on The Motley Fool Australia.

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More reading

• NAB share price on watch after half-year earnings fall short of expectations
• 4 reasons to buy ASX 200 banks stocks right now
• 3 ASX 200 bank shares to go ‘long and bullish’ on right now
• 5 things to watch on the ASX 200 on Thursday
• Buy NAB and this ASX dividend share: analysts

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 positions in and has recommended Goldman Sachs Group. 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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S&P/ASX 200 Index (ASX: XJO) shares are taking a tumble today, down 0.6% in late morning trade, having earlier posted losses of 0.9%.

Unless there’s a turnaround later in the day, this will mark the third straight day of losses for the benchmark index.

The ASX 200 first came under renewed pressure on Tuesday following another boost in interest rates from the RBA that caught the market by surprise.

Today’s pressure also looks to come largely from higher interest rates. Only this time, we have the United States Federal Reserve to thank.

US Fed adds more pressure to the ASX 200

While most of us were sleeping in Australia, the Federal Open Market Committee (FOMC) opted to boost the official US interest rate by another 0.25%. That brings the Fed’s target rate to a range of 5.00% to 5.25%. You’d need to head back to 2007 to find rates any higher in the US.

The ASX 200 looks to be following the lead of US markets, where all the major indexes tumbled more than 1% following the Fed’s announcement.

On the plus side of this ledger, the Fed has eased back on its hawkish tone.

Where before the central bank had said it anticipated that some additional interest rate increases might be required, that was left out of the FOMC’s statement yesterday.

A pause in the tightening cycle next month would offer some fresh tailwinds for US equities as well as ASX 200 shares.

“A decision on a pause was not made today,” Fed chair Jerome Powell said before highlighting the dovish shift in language.

“That’s a meaningful change that we’re no longer saying that we anticipate” more rate increases, he said (quoted by Bloomberg).

Instead the FOMC “will closely monitor incoming information and assess the implications for monetary policy”.

“So we’ll be driven by incoming data, meeting by meeting, and we’ll approach that question at the June meeting,” Powell said.

As for a looming recession in the world’s top economy that could further pressure US equities and the ASX 200?

“It’s possible that we will have, what I hope, will be a mild recession,” Powell said.

“The case of avoiding a recession is, in my view, more likely than that of having a recession. But the case of having a recession, I don’t rule that out either.”

What are the experts saying?

Many investors continue to price in likely rate cuts from the Fed later in 2023. While that would be welcomed by global share markets, including the ASX 200, most experts don’t see that happening.

Here’s what some of the top thinkers are saying (courtesy of The Australian Financial Review).

“Although we too think the Fed is likely done with further rate hikes, we think September is too early for cuts,” TD Securities stated.

“Given the lagged effects of the Fed’s past rate hikes and recent tightening in financial conditions, we think rate cuts are more likely to start at the very end of 2023 or early 2024.”

According to Morgan Stanley:

With the range now at the Fed’s projected peak of 5.00% to 5.25%, we expect it to remain on hold before making the first 25bp cut in March 2024. Like the Fed, we see the effects of banking stresses on the economy as highly uncertain and will hone our expectations for the economy and monetary policy as incoming data evolves.

And for ASX 200 investors still hoping to see the US Fed bring down rates this year, here’s what Schwab’s Liz Ann Sonders said:

The Fed is already suffering a credibility problem—a pivot to rate cuts with inflation still well above their target, and in the absence of significant deterioration in its other mandate (employment), would really damage what remains of their inflation-fighting cred.

With the ASX 200 now down 2.9% from Monday’s intraday highs, I’d say most Aussie investors, retail and professional, have already priced in another year of high rates from both the RBA and the Fed.

In fact, now might be a great time to hunt for companies trading at bargain prices.

The post The US Fed just lifted rates again. Here’s how the ASX 200 is responding today appeared first on The Motley Fool Australia.

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More reading

• 4 reasons to buy ASX 200 banks stocks right now
• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Investing for passive income? Here’s your dividend yield if you bought BHP shares in July

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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