Why is the Allkem share price dumping 5% today?

The Allkem Ltd (ASX: AKE) share price has found itself in the unloved basket in Monday afternoon trading.

As we march toward the close, shares in the lithium miner are contending with a 5.4% fall. This move takes the global materials company’s share price to $14.05. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is struggling with its own 1.6% bashing today.

Let’s take a look at what might sapping Allkem of its excitement.

Nowhere to hide amid concern

Although the field has improved this afternoon, the broad Australian share market is still in a nervous state. At the time of writing, the materials portion of the Aussie index is nursing a deep 4.4% wound as investors flock to an exit.

Oddly enough, the usual suspects of exaggerated selling — such as the tech and consumer discretionary sectors — are in the green. Whereas, the prolonged commodity euphoria is taking a back seat and cooling off.

The Allkem share price, along with many others, is failing to receive support amid deepening economic fears. A combination of persistent inflation and a hobbled Chinese economy is putting the prospects of a recession front of mind for investors today.

Consequently, money is draining out of energy and commodity investments. If economic conditions worsen, it is likely that commodities and oil will take a hit from reduced demand.

Last week, analysts at investment bank Barrenjoey shared their forecast of a ‘probable’ recession. While the team highlighted it would probably be short, many investors are choosing not to hang around to find out.

Could the Allkem share price be attractive?

Where there is a seller, there’s a buyer… and with over 2.6 million Allkem shares changing hands today, some investors are deciding to load up.

While we can only speculate, one fundie that might be making the most of the Allkem share price today could be Wilsons. Recently, the private wealth manager named Allkem as its “preferred” exposure to the lithium sector.

Specifically, the team at Wilsons believes there could be more earnings upside for the lithium player. If that were to be, today’s valuation could end up looking attractive.

The Allkem share price has rallied 28% since the beginning of 2022. This is roughly on par with other lithium names such as Pilbara Minerals Ltd (ASX: PLS) so far this year.

The post Why is the Allkem share price dumping 5% today? appeared first on The Motley Fool Australia.

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More reading

• Our 4 favourite lithium ASX shares right now: Wilsons
• 2 stellar ASX growth shares that experts say are buys
• Allkem share price sinks 5% amid Mexico lithium deposit speculation
• Here’s which ASX lithium shares investors have been loading up on this month
• Why is the Sayona Mining share price in the doldrums this week?

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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