Why is the Liontown Resources share price down 5% today?

The Liontown Resources Limited (ASX: LTR) share price is in the red on Wednesday’s trading session.

At the time of writing, shares in the lithium explorer and developer are down 4.51% at $1.695 apiece.

What’s up with the Liontown share price?

Whilst there’s been nothing price sensitive out of Liontown’s camp today, noteworthy is the higher than expected U.S inflation data overnight and the impulse it has fed into the ASX.

All sectors are in the red today with minute pockets of green to be found scattered throughout the indices.

Liontown is no different and has incurred selling pressure straight from the opening bell, with trading volume now already 33% of the 4-week trading average.

Chief to the downside is the specific U.S inflation numbers themselves.

The consumer price index (CPI) spiked 10 basis points month-on-month (MoM) in August, whereas core CPI rose 0.6% MoM and 6.3% year-on-year.

Both were ahead of an expected decline for the period.

Fittingly, U.S exchanges reacted violently, and witnessed their worst session in around 2 years yesterday, sending a wave of risk-off sentiment throughout equity markets.

Meanwhile, yields on 2-year Treasury bonds surged to a 15-year high of 3.8% on Friday, increasing the inversion of the Treasury yield curve.

An inversion of the Treasury yield curve has statistically been shown to be a warning sign of/present before each economic recession since the 1970s.

Point is, that this latest inflation data from the world’s largest economy by gross domestic product (GDP) gives central banks more ammunition to continue raising policy interest rates.

And that typically spells bad news for equity markets, especially at the smaller end of town, where both corporate and investment value is heavily tied to movement in these rates.

The Liontown Resources share price has certainly felt the pinch today and continues its descent into chaos alongside the bolus of ASX shares. It remains up 30% in the past 12 months.

The post Why is the Liontown Resources share price down 5% today? appeared first on The Motley Fool Australia.

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More reading

• When will the Liontown share price start roaring?
• Liontown share price falls despite ‘milestone’
• Brokers name 3 ASX lithium shares to buy
• Why is the Global Lithium Resources share price rocketing 27% this week?
• 5 ASX 200 lithium shares with the lowest levels of debt

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 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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