Category: Stock Market

S&P/ASX 200 Index (ASX: XJO) oil stocks are having a day to forget, with the big oil and gas companies facing multiple headwinds.

In early afternoon trade, the Santos Ltd (ASX: STO) share price is down 3.7% while Woodside Energy Group Ltd (ASX: WDS) shares have tumbled 5.17%.

Indeed, while the ASX 200 is down a hefty 1.42% at the time of writing, the S&P/ASX 200 Energy Index (ASX: XEJ) has dropped 4.4%.

So, what’s going on?

What are investors considering?

ASX 200 oil stocks are being hit with two related but separate concerns that have sent the Brent crude oil price to its lowest level since late 2021. Brent is currently trading for US$73.95 per barrel.

First, investors are broadly skittish as the contagion from the United States banking crisis has spread to Europe.

Last week markets were roiled by the collapse of US-based SVB Financial Group (NASDAQ: SIVB), or Silicon Valley Bank.

This week it’s Credit Suisse Group (SWX: CSGN) stoking investor fears. With the bank struggling to access additional funds, the Credit Suisse share price cratered 24% on the SIX Swiss Exchange overnight, reaching new all-time lows.

The prospect of a global banking crisis is sparking fresh recession fears. And a world in recession would demand less oil.

That’s the demand side.

The second concern hitting ASX 200 shares today is an oversupply of crude oil. At least in the short term.

According to a monthly report just out from the International Energy Agency (IEA), oil stockpiles are at 18-month highs. That’s partly due to Russia managing to actually up its crude production in February, despite international sanctions.

The IEA noted (quoted by Bloomberg):

World oil supply should comfortably exceed demand in the first half of the year. Much of the supply overhang reflects ample Russian barrels racing to re-route to new destinations… Russian oil supply has held up surprisingly well following its invasion of Ukraine … the country is still shipping roughly the same amount of oil to world markets.

Is now the time to buy ASX 200 oil stocks?

With ASX 200 oil stocks now well into the red in 2023, is now the time to buy?

That, of course, hinges on how crude oil prices track over the remainder of the year.

But for investors with a medium-term horizon of at least a year or so, I believe both the Santos and Woodside share prices will trade significantly higher inside the next 12 months than where they’re at today.

Of course, there are no guarantees. And both ASX 200 oil stocks may well slide further from their current levels in the short term.

But the outlook for oil demand in the latter half of 2023 remains robust.

Both the Organization of Petroleum Exporting Countries (OPEC) and the IEA believe oil demand from China – the world’s number two economy and most populous nation – will increase over the year.

CBA mining and energy analyst Vivek Dhar also believes China will help drive an uptick in global oil demand, along with the world’s second most populous nation, India.

Dhar said he expects the current ample supply scenario won’t last, which will drive crude oil prices higher in the second half of the year.

“We see deficit risks rising in H2 2023, as global oil supply growth, driven mainly by US, Norway and Brazil, fails to keep up with global oil demand growth,” he said.

Dhar forecasts the Brent oil price will increase to $US88 per barrel in the second half of 2023.

That’s up 19% from today’s oil price.

If that proves accurate, it should offer some strong support for the ASX 200 oil stocks.

The post ASX 200 oil stocks are tanking. Is now the time to buy? appeared first on The Motley Fool Australia.

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More reading

• Why Bendigo and Adelaide Bank, BHP, IPH, and Woodside shares are dropping
• ASX 200 bank shares are deep in the red on Thursday. Here’s why
• Why is the Woodside share price sinking today?
• 5 things to watch on the ASX 200 on Thursday
• Investing in ASX 200 shares? Here’s what to expect from the US Fed next week

SVB Financial provides credit and banking services to The Motley Fool. 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 positions in and has recommended SVB Financial. The Motley Fool Australia has recommended SVB Financial. 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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a sizeable decline. At the time of writing, the benchmark index is down 1.4% to 6,970.9 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

Bendigo and Adelaide Bank Ltd (ASX: BEN)

The Bendigo and Adelaide Bank share price is down 3% to $8.83. This follows news that the banking crisis has spread to Europe with Credit Suisse the latest bank rumoured to be fighting for survival. And while the Swiss central bank has assured Credit Suisse that it will provide extra liquidity if needed, it isn’t painting a positive picture of the sector as a whole.

BHP Group Ltd (ASX: BHP)

The BHP share price is down 4% to $43.73. This follows a similarly large decline by the mining giant’s shares on the NYSE during overnight trade. This has been driven by concerns over the state of the global economy and what this might mean for commodity demand and pricing.

IPH Ltd (ASX: IPH)

The IPH share price is down 12% to $7.37. Investors have been selling this intellectual property services company’s shares after it was hit by a cyber-attack. IPH advised that it detected unauthorised access to a portion of its IT environment on 13 March. An investigation into the incident could take “some time to complete.”

Woodside Energy Group Ltd (ASX: WDS)

The Woodside share price is down 5% to $31.20. This has been driven by another pullback by oil prices overnight on global economic growth concerns. WTI crude oil futures fell more than 5% to settle at US$67.61 per barrel, whereas Brent crude oil fell 4% to settle at US$74.36 per barrel. WTI crude oil futures were at their lowest level since December 2021.

The post Why Bendigo and Adelaide Bank, BHP, IPH, and Woodside shares are dropping appeared first on The Motley Fool Australia.

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More reading

• ASX 200 oil stocks are tanking. Is now the time to buy?
• Why is the Bendigo Bank share price being hit the hardest of the small ASX banks?
• ASX 200 stock IPH sinks 12% following cyber attack update
• Why is the BHP share price tumbling 4% today?
• Why is the Woodside share price sinking today?

Motley Fool contributor James Mickleboro 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 Bendigo And Adelaide Bank. The Motley Fool Australia has recommended IPH. 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 Coles Group Ltd (ASX: COL) share price has performed quite well since the start of 2023, rising by around 7%.

That compares to a return of just 0.2% for the S&P/ASX 200 Index (ASX: XJO). The index is suffering today amid banking problems in the northern hemisphere with Silicon Valley Bank and now Credit Suisse.

As for Coles, its share price last traded above $19 in August 2022. But much has happened since then, with multiple interest rate rises in Australia, as well as annual inflation still stubbornly high.

For me, one of the biggest drivers of longer-term share price performance is profit improvement and plans for business improvement.

Despite the Coles share price being down close to 10% since August 2022, the company has actually delivered sales and earnings growth since then.

Earnings recap

In the recent FY23 half-year result for the 27 weeks to 1 January 2023, Coles said that its continuing operations sales revenue had increased 3.9% to $20.8 billion. At the same time, earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 7.6% to $1.8 billion and earnings before interest and tax (EBIT) went up 9.9% to $1.06 billion.

Continuing operations net profit after tax (NPAT) increased 11.4% to $616 million, while earnings per share (EPS) rose 11.6% to 46.3 cents.

This enabled dividend growth of 9.1% to 36 cents per share.

Coles is divesting its Coles Express to Viva Energy Group Ltd (ASX: VEA), which is why the supermarket business has outlined its ‘continuing operations’ earnings so investors can see the performance of the ongoing business.

By the end of FY23, the business is expecting to achieve cumulative smarter selling benefits of $1 billion across its four-year program. Some of these benefits include trolley-assisted checkouts, energy reductions across heating, ventilation, and cooling, measures to tackle theft, and the use of advanced analytics and store-specific data to “markdown rates”.

Can the outlook drive the Coles share price higher?

Coles said that in the third quarter of FY23, its supermarkets’ volume growth returned to “modestly positive” from mid-January.

However, supplier input cost pressures remain, “particularly related to packaged goods, wages and energy”.

In January, the supermarket business commenced operations at the Witron automated Queensland distribution centre, with the receipt of its first inbound supplier deliveries. It’s expecting to ramp up operations in the fourth quarter of FY23.

I think that the new distribution centres can help improve Coles’ efficiencies and profit margins. The business has made the right moves, in my opinion, by investing in these impressive buildings.

With ongoing food inflation and a return to volume growth, I think Coles will be able to deliver profit growth and dividend growth.

With the current Commsec estimates, the Coles share price is valued at 22x FY23’s estimated earnings with a potential grossed-up dividend yield of 5.3%. With ongoing profit growth expected over the financial years to FY25, I think Coles will be able to generate more investor interest and rise to $19 and beyond.

My colleague James Mickleboro also reported on Citi’s $20.20 price target on Coles, which implies the next 12 months could be a promising time for investors.

The post Is the Coles share price heading back up to $19? appeared first on The Motley Fool Australia.

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More reading

• Is now the time to be bold and snap up cheap ASX 200 dividend shares?
• What’s going on with Credit Suisse and why is it impacting ASX 200 shares?
• 5 things to watch on the ASX 200 on Thursday
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Investing in ASX 200 shares? Here’s what to expect from the US Fed next week

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 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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is off its lows but still on course to record a disappointing decline. The benchmark index is currently down 1.45% to 6,966.3 points.

Four ASX shares that are not letting that hold them back are listed below. Here’s why they are charging higher:

Atlantic Lithium Ltd (ASX: A11)

The Atlantic Lithium share price is up 11% to 49 cents. Investors appear to be taking advantage of recent weakness to pick up shares in this lithium explorer. Its shares were crushed after being hit by a scathing short attack alleging corruption. The company has refuted these claims.

Pushpay Holdings Ltd (ASX: PPH)

The Pushpay share price is up 15% to $1.30. This morning, this payments company revealed that it has received an improved takeover proposal from Pegasus BidCo. According to the release, Pegasus has lifted its offer by 6% from NZ$1.34 cash per share to NZ$1.42 per share. This represents an offer of A$1.32 per share and values Pushpay at A$1.52 billion.

St Barbara Ltd (ASX: SBM)

The St Barbara share price is up 3% to 59.2 cents. Investors have been buying gold miners again on Thursday in response to the market volatility. This has led to the S&P/ASX All Ordinaries Gold index rising over 0.5% this afternoon.

Temple & Webster Group Ltd (ASX: TPW)

The Temple & Webster share price is up 2.5% to $3.54. This has been driven by news that the online furniture retailer is undertaking an on-market share buyback. Temple & Webster intends to acquire up to $30 million worth of its shares over a 12-month period starting on 3 April. It commented: “The board considers the acquisition of shares at prevailing prices to be effective capital management while retaining financial flexibility to fund accretive organic and inorganic opportunities as part of its growth strategy.”

The post Why Atlantic Lithium, Pushpay, St Barbara, and Temple & Webster shares are rising appeared first on The Motley Fool Australia.

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More reading

• Despite today’s ASX sell-off, All Ords gold shares are surging significantly higher
• Amid the carnage, this ASX tech stock is rocketing 15%. Here’s why
• Temple & Webster share price higher on $30 million share buyback
• Guess which ASX lithium share just rebounded 15%
• Why Atlantic Lithium, Life360, Neuren, and Whitehaven Coal shares are charging higher

Motley Fool contributor James Mickleboro 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 Pushpay and Temple & Webster Group. The Motley Fool Australia has positions in and has recommended Pushpay. The Motley Fool Australia has recommended Temple & Webster 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 S&P/ASX 200 Index (ASX: XJO) is tumbling today, but most S&P/ASX All Ordinaries Index (ASX: XAO) gold shares are defying the sell-off to leap higher.

Gold shares shining brightly today include:

• Newcrest Mining Ltd (ASX: NCM), rising 1.14%
• Evolution Mining Ltd (ASX: EVN), lifting 2.57%
• St Barbara Ltd (ASX: SBM), jumping 3.91%
• Emerald Resources NL (ASX: EMR), leaping 2.38%
• Regis Resources Ltd (ASX: RRL), up 1.97%
• AngloGold Ashanti Ltd (ASX: AGG), 3.33% higher
• SSR Mining Inc (ASX: SSR), 1.43% in the green
• Resolute Mining Ltd (ASX: RSG), elevating 3.17%
• Capricorn Metals Ltd (ASX: CMM), up 2.11%
• Westgold Resources Ltd (ASX: WGX), picking up 1.87%
• Genesis Minerals Ltd (ASX: GMD), leaping 2.53%
• Gold Road Resources Ltd (ASX: GOR), rising 1.32%

In contrast, the benchmark ASX 200 Index is 1.51% in the red today.

So why are ASX investors buying up All Ords gold shares today?

What’s going on?

ASX All Ords gold shares appear to be rising today amid a lift in the gold price overnight.

Amid market turmoil, investors appear to be turning to gold as a safe haven asset.

The gold price rose by more than 1% to its highest level since early February during Wednesday’s trade in the USA, Reuters reported. Spot gold hit US$1,924.63 per ounce.

Commenting on this pivot to gold, Blue Line Futures chief market strategist in Chicago, Phillip Streible said:

It’s a total safe-haven trade. There’s a lot of concern about Credit Suisse and now European banks are really coming under quite a bit of pressure. So it’s a complete flight to safety.

The ASX 200 is struggling today after the S&P 500 Index (SP: .INX) slid 0.7% and Dow Jones Industrial Average Index (DJX: .DJI) fell 0.87% in the USA overnight. News that Swiss bank Credit Suisse’s largest investor would not raise its stake beyond 10% (as reported by Reuters) sent the market into turmoil.

However, gold is bucking this trend. We saw a similar pattern on Tuesday, with ASX investors turning to gold despite the ASX 200 sliding.

In a research note this morning, ANZ economist John Bromhead commented on today’s gold rally in the midst of the banking crisis. He said.

After a shaky start, gold rallied sharply as investors rushed to have assets amid the widening banking crisis.

Investors struggled to form a unified view on the Federal Reserve’s next move. Producer prices in the US unexpectedly fell in February. This comes following strong consumer prices earlier in the week. However, fresh woes at Credit Suisse saw safe haven buying continue to pick up. This was aided by the sharp drop in yields on US Treasuries.

Despite the rise overnight, the gold price is now pulling back and is down 0.89% to US$1,914.20 an ounce, CNBC data shows.

The post Despite today’s ASX sell-off, All Ords gold shares are surging significantly higher appeared first on The Motley Fool Australia.

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More reading

• Why Atlantic Lithium, Pushpay, St Barbara, and Temple & Webster shares are rising
• 5 things to watch on the ASX 200 on Thursday
• 5 things to watch on the ASX 200 on Wednesday
• Why Kingsgate, Neuren, Newcrest, and Pushpay shares are rising today
• Why has the Newcrest share price leapt 7% in under a week?

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 Bendigo and Adelaide Bank Ltd (ASX: BEN) share price is down 2.86% today as ASX bank shares are hammered in the fall-out from the Credit Suisse stock plunge overnight.

As we reported earlier, shares in Switzerland’s second-largest bank fell 24% as fear spreads of a contagion in the global banking system following the collapse of two banks in the United States over the past week.

We’ve seen a 105-point fall in the S&P/ASX 200 (ASX: XJO) today, with bank shares faring badly.

What’s happening with ASX bank shares?

Among the small ASX bank shares, the Bendigo Bank share price has fallen the most at 2.86%.

Shares in Bank of Queensland Ltd (ASX: BOQ) are down 1.96%.

The big four banks are not immune, either. They all opened lower this morning before recovering a little.

At the time of writing, the ANZ Group Holdings Ltd (ASX: ANZ) share price is down 1.63%.

The National Australia Bank Ltd (ASX: NAB) share price is down 1.02% while the Westpac Banking Corp (ASX: WBC) share price has dropped 1.64%.

Commonwealth Bank of Australia (ASX: CBA) shares have recovered somewhat to be just 0.06% lower.

The Macquarie share price has fallen the most among the major players, down 2.28%.

It is unclear why the Bendigo Bank share price has been hit hardest among the small ASX banks.

The Credit Suisse drama

To recap, Credit Suisse stock plunged last night after its major shareholder, the Saudi National Bank (SNB), said it would not increase its holdings to prop up the Swiss bank.

SNB holds a 9.88% stake in Credit Suisse and can’t buy more because of regulatory restrictions.

Credit Suisse shares are now down by more than 50% since early February.

The Swiss central bank has said it will give Credit Suisse extra liquidity if needed.

The post Why is the Bendigo Bank share price being hit the hardest of the small ASX banks? appeared first on The Motley Fool Australia.

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More reading

• What’s going on with Credit Suisse and why is it impacting ASX 200 shares?
• Why are the smaller ASX 200 banks rebounding so strongly on Wednesday?
• ASX 200 bank shares: Are they better prepared than Silicon Valley Bank?
• 5 things to watch on the ASX 200 on Monday
• Why are ASX 200 bank shares like CBA being annihilated today?

Motley Fool contributor Bronwyn Allen has positions in Anz Group, Commonwealth Bank Of Australia, and Westpac Banking. 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 Bendigo And Adelaide Bank. The Motley Fool Australia has recommended Westpac Banking. 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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All of us at some point — barring a miraculous cure for aging — will succumb to our mortality. The following proceedings of remembrance and celebration of life will typically then be placed in the hands of a funeral operator, perhaps even the ASX All Ords share I recently invested in.

Last week, I decided it was time to bring Propel Funeral Partners Ltd (ASX: PFP) into my portfolio. The second-largest funeral operator by market share had been on my watchlist for years. During this time, I found the management team’s execution of growth consistently impressive.

The combination of a solid interim result and a falling share price sealed the deal. Alas, I secured 463 shares at an average price of $4.31 — $1,995 worth of what I believe is an exceptional company.

Follow along as I explain:

• Why I’m expecting 17% per annum returns from this investment over the next five years
• An area of the business I think could be overlooked
• The line in the sand for a sell

Let’s begin!

What does the industry look like?

Firstly, Propel should benefit from a sector-wide tailwind for the death care services industry over the coming decades. The reality of the situation is the developed world has an aging population, leading to more deaths on an annual basis.

As noted by Propel, the next decade or so is forecast to see a compound annual growth rate (CAGR) of deaths in Australia of 3.1%. For context, this is more than three times higher than the rate of growth between 1990 and 2021.

While the increase in deaths is expected to slow between 2032 and 2050, it is still predicted to outpace our current historical rate, as shown below. If these forecasts are to be believed, most funeral operators should see an uplift in revenue.

The other component of opportunity for Propel is a continuation in industry consolidation. Around 29% of the market is in the hands of InvoCare Limited (ASX: IVC) and Propel (at the end of 2022). Reducing the remaining market share — primarily made up of small independent and family-owned operators — to 71%.

I believe consolidation begets consolidation. As the two largest companies in the industry take a greater share, small operators could come under greater pressure, increasing the likelihood of further mergers and acquisitions at attractive prices.

Clear growth strategy ahead

Propel holds a commendable track record for bolting on additional brands and operations. Since 2013, the company has expanded from one location in Queensland to 152 across most of Australia and New Zealand.

If the company continues to grow its market share, my conservative estimate is that revenue will grow at an annual compounded rate of around 14% out to FY28.

Realistically, I think Propel could end up exceeding this estimate. The company’s much larger rival, InvoCare, managed to grow its revenue by around 12% in both FY21 and FY22. Starting from a small base, Propel should find it easier to grow at a faster pace given the law of large numbers.

My own projections have this ASX All Ords share pulling in net profits after tax (NPAT) of $48.8 million in FY28. At that time, the business will be in a much more mature position, so I’ve assumed a price-to-earnings (P/E) ratio of 20 times.

These estimates add up to a projected market capitalisation of $914.5 million — 79.5% above today’s valuation.

What could be getting overlooked?

There’s another income source for Propel that I haven’t factored into my forward projections, that could deliver high-margin income… investment income from prepaid funerals.

It’s a somewhat controversial practice. Funeral providers offer people the option to pay for their funeral in advance, allowing the company to earn returns on the funds until they are required. As long as the funds are grown beyond the cost of the agreed-upon service, the difference can be pocketed.

Overall, the additional returns from this are likely to be modest. At the moment, Propel’s contract assets are actually $4.8 million in the red compared to its liabilities. However, it is worth at least knowing that this business practice could influence the bottom line later on.

What would prompt a change of mind?

Even the best companies can fail to deliver. That’s why it is helpful to lay out the conditions for failure in advance. For this, there are two key aspects of the business I’ll be keeping close tabs on:

• EBITDA margins
• Merger and acquisition activity

Firstly, EBITDA margins will be valuable for monitoring any detriment to profitability if cremations grow in popularity.

The alternative to burials is a cheaper option, which could present a headwind. Propel’s most recent full-year margin came in at ~27%. Personally, I’d have some concerns if this metric were to fall below 20%.

Secondly, my thesis for this ASX All Ords share rests on management sustaining its approach to industry consolidation, increasing its market share. I personally don’t believe the company will grow to its valuation 100% organically. As such, if a halt to its acquisition activity occurred for some reason, I would reconsider my investment.

Final takeaway

There are few things in life as predictable as death. As an investor, I look at a company like Propel and see a business that provides an essential service. A service that possibly will never be disrupted.

The older I get, the more value I see in businesses that could exist for 30 years, 50 years — heck, even 100 years. Indeed, the best investment I could make is one that outlives me… how ironic.

Like other great long-term compounders on the ASX such as Washington H. Soul Pattinson and Co Ltd (ASX: SOL) and Brickworks Limited (ASX: BKW), Propel may not be the most exciting ASX All Ords share, but I think it could have the staying power needed to allow compounding to work its magic.

The post Here’s why I just invested nearly $2,000 in this ASX All Ords share appeared first on The Motley Fool Australia.

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More reading

• Top ASX shares to buy in March 2023
• 3 ASX All Ordinaries stocks climbing on strong earnings updates

Motley Fool contributor Mitchell Lawler has positions in Propel Funeral Partners. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Propel Funeral Partners. 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) bank shares are taking a tumble today.

Here’s how the big four bank stocks are tracking during lunch hour on Thursday:

• Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares are down 1.72%
• National Australia Bank Ltd (ASX: NAB) shares are down 0.76%
• The Westpac Banking Corp (ASX: WBC) share price is down 1.43%
• And Commonwealth Bank of Australia (ASX: CBA) shares are even after an earlier plunge

Now, it’s not just ASX 200 bank shares under pressure today.

The benchmark index is also down 1.41% at the time of writing, with the S&P/ASX 200 Financials Index (ASX: XFJ) dipping 0.75%.

So, what’s going on?

Why are ASX 200 bank shares out of favour today?

Financial shares the world over are catching turbulence as some of their international peers struggle with rapidly rising interest rates following a decade-long era of easy money.

Modest increases in interest rates can improve banks’ profitability by increasing their net interest margins.

But rapid rates can see their private and business customers struggle to make loan payments, increasing the level of defaults.

ASX 200 bank shares came under pressure earlier this week in the wake of the collapse of United States-based SVB Financial Group (NASDAQ: SIVB), or Silicon Valley Bank.

As depositors began to fear SVB was facing liquidity issues, the dreaded bank run ensued, and the bank was unable to meet the demand for withdrawals. The government stepped in to assure depositors will be fully covered, but shareholders were left holding the bag.

Shares in the now-defunct bank last traded on 9 March, a day they tanked by a gut-wrenching 60%.

Banking crisis leaps across the pond

In the latest development putting new pressure on ASX 200 bank shares, the contagion from SVB’s collapse appears to have spread to Europe.

Investors are now worried about the viability of Credit Suisse Group (SWX: CSGN). Fears were stoked after the Swiss-based bank’s largest investor, Saudi National Bank, said regulatory issues prevented it from providing additional funds.

Shares in Credit Suisse plummeted 24% on the SIX Swiss Exchange, hitting new record lows.

Commenting on the development, the head of institutional clients at Banca Ifigest in Milan, Carlo Franchini, said (quoted by Reuters), “Markets are wild. We move from the problems of American banks to those of European banks, first of all Credit Suisse. This is dragging lower the whole banking sector in Europe.”

As for what investors in ASX 200 bank shares can expect from the global banking sector over the coming weeks, we’ll likely just have to wait and see.

“It’s too early to know how widespread the damage is,” BlackRock chief executive Laurence Fink said (courtesy of The Australian Financial Review).

“The regulatory response has so far been swift, and decisive actions have helped stave off contagion risks. But markets remain on edge,” Fink added.

Indeed!

The post ASX 200 bank shares are deep in the red on Thursday. Here’s why appeared first on The Motley Fool Australia.

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More reading

• Is now the time to be bold and snap up cheap ASX 200 dividend shares?
• How much would I need to invest in ASX income shares to earn $500 a month?
• Are NAB shares a buy following the SVB-induced dip?
• Investing in ASX 200 shares? Here’s what to expect from the US Fed next week
• Here’s how to value the Westpac share price

SVB Financial provides credit and banking services to The Motley Fool. 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 positions in and has recommended SVB Financial. The Motley Fool Australia has recommended SVB Financial and Westpac Banking. 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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Well, gold seems to be the only asset climbing in value this week – fulfilling its traditional role as a defensive asset, one could argue. On Monday, we covered how a few ASX gold exchange-traded funds (ETFs) were benefitting from higher prices and cracked new record highs. Well, the highs have continued to flow today. 

Let’s take a look at the gold price itself for a moment though. On Monday, gold was fetching around US$1,876 per ounce, up from US$1,867 the previous week. This jump is what spurred the new highs we saw on Monday.

Today, the precious metal is asking US$1,923 per ounce – another 2.5% above where it was on Monday.

So it’s no secret that these sharp rises in gold are being fuelled by the turmoil we are seeing in the global financial system right now. On Monday, we have the news that US bank SVB Financial Group had gone belly up. Today, everyone is talking about Credit Suisse‘s implosion.

Failing banks is one of the most disruptive events for a financial system to deal with. So it’s perhaps no surprise to see investors panicking and heading into the ‘safe haven’ of gold.

But let’s see where the rubber is hitting the road.

These ASX gold ETFs are at new record highs

So the ASX has seen not one, but two ASX gold ETFs hit new record highs today.

The first is the Global X Physical Gold ETF (ASX: GOLD). On Monday, we covered how this ETF had hit a new high of $26.49. Well today, that same ETF has climbed even higher and hit a new record of $26.94 per unit this morning.

It’s not the only ETF at new heights either. The Perth Mint Gold (ASX: PMGOLD) ETF has also seen a new high today. Perth Mint Gold units hit their new record of $29.02 just after market open this morning as well:

Both of these ETFs allow investors to indirectly buy gold by holding physical gold bars on their behalf. Thus, the value of this gold and the ETF is directly affected by higher gold prices. So it’s no surprise to see these two gold ETFs at new high watermarks this Thursday. 

The post 2 ASX gold ETFs cracking new record highs today appeared first on The Motley Fool Australia.

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• 2 ASX gold ETFs hitting record highs today

SVB Financial provides credit and banking services to The Motley Fool. 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 positions in and has recommended SVB Financial. The Motley Fool Australia has recommended SVB Financial. 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 has been another difficult session for the Core Lithium Ltd (ASX: CXO) share price.

In morning trade, the lithium miner’s shares dropped over 6% to a 52-week low of 80.5 cents.

The Core Lithium share price has recovered a touch since then but currently remains down 3.5% at 83 cents.

Should you take advantage of the weakness in the Core Lithium share price?

Regular readers may be aware that I’ve been warning about the potential for the Core Lithium share price to fall materially in recent months. This was due to its valuation in comparison to peers.

Since the release of the aforementioned article, the lithium miner’s shares have crashed 35%. So, is now the time to invest?

The good news is that the company’s shares are now trading lower than the valuations of even the most bearish of brokers.

For example, both Citi and Goldman Sachs currently have sell ratings and 90 cents price targets on the company’s shares. This implies almost 8.5% upside from current levels, which isn’t bad for a sell rating!

In addition, Macquarie continues to see significantly more value in the Core Lithium’s shares. As recently as last week, its analysts retained their outperform rating and $1.30 price target on them.

While seeing the Core Lithium share price rise to this level seems unlikely in the current environment, if it were to do so, it would mean a massive 57% return for investors buying in at today’s price.

What could get its shares rising again?

Given how lithium shares are high up on the risk curve, recent market volatility has hit them hard.

If things calm down and global economic growth and banking system concerns ease, then it would likely give its shares a boost. In addition, a reversal in recent lithium price weakness would be very welcome for the industry and could give its shares a lift.

The post The Core Lithium share price just hit a 52-week low. Time to pounce? appeared first on The Motley Fool Australia.

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More reading

• Pilbara Minerals or Core Lithium shares: Which would I buy?
• Why Atlantic Lithium, Arafura, Brainchip, and Core Lithium shares are falling
• Here are the 10 most shorted ASX shares this week
• 5 things to watch on the ASX 200 on Monday
• Why are ASX 200 lithium shares falling so hard today?

Motley Fool contributor James Mickleboro 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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