Category: Stock Market

Ask A Fund Manager

The Motley Fool chats with the best in the industry so that you can get an insight into how the professionals think. In this edition, Discovery Fund portfolio manager Chris Bainbridge and Mark Devcich run their eyes over three ASX shares that are now heavily discounted.

Cut or keep?

The Motley Fool: Let’s examine three ASX shares that have been devastated this year, and see if you think each of these is now a bargain buy or if you’d stay away.

The first one is Aussie Broadband Ltd (ASX: ABB), which has almost halved since last Easter. What do you guys reckon?

Mark Devcich: We feel like it’s a buy… To be honest, it got extremely overheated and they did a merger last year with Over The Wire and we feel that’s a strategically a smart thing to do because it gives them more exposure to business and enterprise, and the core Aussie Broadband business was more residential focused.

But the valuation did get overcooked really. The fall in share price hasn’t really been due to execution issues, it’s more just been a devaluation derating. So we feel like there’s another one with a founder-led management team, they’ve got a name to take their market share for NBN residential to 10% from the current 7%, so that’s a more than 50% increase.

There’s also some pretty favourable dynamics in the NBN space right now. You may have seen that the NBN wrote down the value of the network by $31 billion recently, and that was driven by changes to the prices they charge the retail service providers. That’s extremely beneficial to players like Aussie Broadband, who have to pay the NBN for access to the network. And what that’s going to mean is once these changes come through in 1 July, [which] is the expected time frame, there should be substantial margin uplift.

In particular, it’s very favourable for Aussie Broadband because what’s happened is [NBN’s] proposed to take off consumption charges. Because Aussie Broadband gives higher speed plans, and higher usage customers, they’re actually going to benefit more than a regular telco. We don’t feel like consensus is properly factoring in the benefits that could come from this change in NBN pricing into the ’24 financial year.

MF: The next one has just been a shocker. Megaport Ltd (ASX: MP1), which has lost about 65% over the past year or so?

Chris Bainbridge: It’s probably a short-term sell from us.

So what are the reasons for that? At Discovery, we operate a risk management system for both stocks and the portfolio, and at a stock level, that risk management system operates with red flags and amber flags. So we categorise certain things as red flags and certain things as amber flags. If it presents a red flag, it requires us to reduce the position, depending on its quality, by a certain amount.

Now, an unexpected CEO exit is a red flag. As we saw, Vincent English unexpectedly exited the company earlier this week, so just based on our system, we’ve been reducing the position on the basis of that.

More concerning is Vincent’s exit post the exit of Rodney, who was the chief revenue officer last year and then they had more turnover at the company’s secretarial level. It’s always concerning when you see management changes because we’re only seeing the tip of the iceberg. 

MF: The third one is Domino’s Pizza Enterprises Ltd (ASX: DMP), which also halved over the past year. Bargain buy or stay away?

CB: Again, short-term sell from us. 

Domino’s is a company which starts to deliver over footy season. The surprising result was the fact that same-store sales declined in the first half of ’23 more than expected and then became significantly more negative in the first several weeks, down 2.2%. What’s a real concern there, first half of ’23 had the football World Cup in Europe, and that should have been really supportive [of] same-store sales.

So for them to deteriorate more than expected suggests that the business is really struggling. 

Now, clearly, consumers have pushed back against some of those measures intended to pass on the inflationary costs. But abandoning that, Domino’s will probably need to assist franchisees on margins. For example, maybe they defer the advertising contributions that franchisees usually pay, so they’d probably have to do that whilst facing higher input costs themselves as a business.

What does that mean? We can see in the results they’ve had to slice — pun intended — their same-store sales targets and at the same time, there are still rollout plans. So short term, it’s probably cooked. 

Long term, we believe that there’s a great business there. Long term, it’s a great business, but short term, no.

The post These 3 ASX shares just halved. I would buy one of them: experts appeared first on The Motley Fool Australia.

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More reading

• Why did the Domino’s share price just hit a multi-year low?
• Here are the 10 most shorted ASX shares this week
• 3 ASX shares to avoid like the plague (and one to buy for the next 4 years): expert
• Why Brainchip, Lynas, Megaport, and Universal Store shares are dropping today
• Megaport share price tumbles 10% on CEO resignation

Motley Fool contributor Tony Yoo has positions in Aussie Broadband and Megaport. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Aussie Broadband, Domino’s Pizza Enterprises, and Megaport. The Motley Fool Australia has recommended Aussie Broadband, Domino’s Pizza Enterprises, and Megaport. 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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On Wednesday, the S&P/ASX 200 Index (ASX: XJO) was back on form and stormed higher. The benchmark index rose 0.85% to 7,068.9 points.

Will the market be able to build on this on Thursday? Here are five things to watch:

ASX 200 expected to sink

The Australian share market is expected to sink on Thursday amid concerns that Credit Suisse could collapse. According to the latest SPI futures, the ASX 200 is expected to open the day 118 points or 1.7% lower this morning. In late trade in the United States, the Dow Jones is down 1.2%, the S&P 500 has fallen 1.05% and the NASDAQ is down 0.3%.

ASX 200 shares go ex-dividend

Another group of ASX 200 shares will go ex-dividend this morning and could trade lower. This includes building products company Fletcher Building Ltd (ASX: FBU), battery materials miner IGO Ltd (ASX: IGO), and New Zealand based telco Spark New Zealand Ltd (ASX: SPK).

Oil prices tumble again

ASX 200 energy shares Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could have a difficult session after oil prices sank again on Wednesday night. According to Bloomberg, the WTI crude oil price is down 3.8% to US$68.52 a barrel and the Brent crude oil price is down 3.4% to US$74.76 a barrel. This has been driven by concerns over the banking crisis.

Pro Medicus upgraded

Following recent share price weakness, analysts at Bell Potter have taken their sell rating off Pro Medicus Limited (ASX: PME) shares and upgraded them to hold with an improved price target of $59.00. The broker commented: “Any further weakness in the share price caused by macro events including further monetary policy tightening in the US or a US recession should be regarded as a buying opportunity as PME revenues are generally immune from broader economic conditions.”

Gold price rises

ASX 200 gold shares Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) could have a decent session after the gold price rose overnight. According to CNBC, the spot gold price is up 0.6% to US$1,922.3 an ounce. Demand for safe haven assets boosted the precious metal.

The post 5 things to watch on the ASX 200 on Thursday appeared first on The Motley Fool Australia.

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More reading

• 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
• Guess which ASX lithium share just rebounded 15%
• 2 ASX 300 directors who’ve each sold over $3 million of their company shares in a week
• Hoping to dig into the record IGO dividend? You’d better be quick

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 Pro Medicus. The Motley Fool Australia has positions in and has recommended Pro Medicus. 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 was only just over a year ago that ASX coal shares were on the nose with investors.

With the world transitioning to a zero-carbon future, the dirty fossil fuel was increasingly given the cold shoulder by energy buyers and investors alike.

But after Russia invaded Ukraine in February 2022, there has been a sheepish shift in attitude.

Energy security was all of a sudden paramount for many countries, and renewable energy infrastructure would not be built fast enough to meet immediate demand.

Coal was instantly back in favour again.

This turn in sentiment was seen perfectly in one particular S&P/ASX 200 Index (ASX: XJO) stock.

After halving over the preceding four years, the Whitehaven Coal Ltd (ASX: WHC) share price quadrupled in just a few months over 2022.

By October, the stock had hit the $11 mark.

‘Long and bullish’ 

However, with Europe getting through its winter better than anticipated, the energy market has cooled off somewhat in recent months.

As of Wednesday, the Whitehaven coal price was back below $7.

One on-the-ball punter recently asked Shaw and Partners portfolio manager James Gerrish whether he would buy the stock at that price.

The answer was a resounding yes.

“We remain long and bullish Whitehaven Coal, and if we had no position we would be accumulating into current weakness in the $7 region,” he said on a Market Matters Q&A.

Not only is there upside in the share price, according to Gerrish, the dividend yield would remain massive.

“We believe Whitehaven Coal’s average price through the remainder of 2023 will be significantly above $7 while the stock yields ~10% fully franked.”

He’s not the only one bullish on Whitehaven. Morgans analysts this week expressed their enthusiasm for the coal stock.

“Morgans has an add rating and $10.35 price target,” reported The Motley Fool’s James Mickleboro.

“This suggests [a] potential upside of 53% for investors. Its analysts expect this to be complemented with a 10% dividend yield.”

And as for the energy sector in general, the supply-demand equation is expected to continue to favour investors.

“We think the outlook for energy stocks is attractive because there’s just not a lot of supply coming in,” Schroders portfolio manager Ray David told The Motley Fool in January.

“No one really wants to invest in fossil fuels or LNG or gas without the high prices to justify the returns, because everyone’s quite worried about renewables and the ESG factors.”

The post Expert tips 10% dividend yield and booming share price for this ASX 200 stock appeared first on The Motley Fool Australia.

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More reading

• Why Atlantic Lithium, Life360, Neuren, and Whitehaven Coal shares are charging higher
• Analysts warn of future earnings downgrades for ASX 200 coal shares
• 3 ASX 200 coal shares to buy for big gains and huge yields: Morgans
• The whopper Whitehaven dividend is being paid today. Here’s what you need to know
• Is the party well and truly over for ASX 200 coal shares?

Motley Fool contributor Tony Yoo 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 Materials Index (ASX: XMJ) climbed 0.9% today, but these three ASX mining shares soared far higher.

The Lode Resources Ltd (ASX: LDR), Atlantic Lithium Ltd (ASX: A11), and Benz Mining Corp (ASX: BNZ) share prices all lifted by more than 10% during trading today.

Let’s take a look at why these three ASX mining shares had such a top run.

Lode Resources

The Lode Resources share price soared 23% in early trade today from 22 cents to 27 cents before retreating. The explorer’s shares closed 13.64% ahead. Lode is exploring silver, gold, and copper in the New England Fold Belt in New South Wales.

The gold price is currently down 0.27% to US$1,906 an ounce, according to CNBC, while silver is sliding 0.88%. Copper is up 0.3% to US$4.0116 a pound, Trading Economics data shows.

Diamond drilling has recently recommenced at Lode’s Webbs Consol Silver project in New South Wales. Commenting on the work at the project, Lode managing director Ted Leschke said:

Drilling to date has discovered six mineralised lodes and revealed that the Webs Consol mineral system much more extensive than previous recognised.
The Company is well funded for the planned drill programme and beyond.

Benz Mining Corp

Benz Mining shares surged 11.8% in earlier trade from 38 to 42.5 cents. The company’s shares finished at 42 cents each at market close, up 10.53%.

Benz Mining is exploring gold, copper, lithium, and nickel in the James Bay area of Quebec, Canada. Benz shares lifted today despite no news from the company. In February, Benz advised its 2023 diamond drilling campaign has started in the Upper Eastmain Greenstone Belt. Assay results are pending for 1,600 samples including lithium and gold assays.

Atlantic Lithium

Atlantic Lithium rebounded on Wednesday. The company’s share price surged 14.6% in morning trade from 41 to 47 cents. The lithium developer’s share price closed at 44 cents, a 7.32% gain.

Today’s gains follow a recent tough run for the lithium explorer. The company last week refuted a short seller report from investment firm Blue Orca.

Atlantic Lithium shares could have lifted today if investors believed the company’s shares were sold off unfairly following the attack. It’s also possible short sellers could now be closing their positions, as my Foolish colleague James reported today.

The post 3 ASX mining shares that surged over 10% on Wednesday appeared first on The Motley Fool Australia.

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More reading

• Could buying BrainChip shares be a classic beginner’s error?
• Are NAB shares a buy following the SVB-induced dip?
• Why analysts are very bullish on these ASX growth shares
• Goldman Sachs says these ASX 200 shares are buys
• Here are the 3 most heavily traded ASX 200 shares on Wednesday

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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Are you wanting to make some new portfolio additions?

If you are, then check out the two ASX 200 shares listed below that Goldman Sachs is bullish on.

Here’s why the broker believes they are buys:

IDP Education Ltd (ASX: IEL)

Goldman Sachs says that this language testing and student placement company is an ASX 200 share to buy.

Its analysts believe that the company is well-placed to deliver double-digit revenue growth through to at least FY 2025. And with its margins forecast to expand, its earnings growth looks set to grow at an even quicker rate. Goldman commented:

While the 1H23 result was modestly below our EBIT forecast (-4%) the company delivered strong revenue growth (+26%) and operating leverage (EBIT margin +476 bps). We expect double digit revenue growth and c.200bps p.a. of EBIT margin expansion to continue over the forecast period, justifying the stock’s premium rating.

Goldman has a buy rating and $35.70 price target on IDP Education’s shares.

Nextdc Ltd (ASX: NXT)

Another ASX 200 share that Goldman is bullish on is data centre operator NextDC.

Thanks to the cloud computing boom, which is driving strong demand for data centre services, NextDC has been growing at a solid rate for years.

The good news is that the shift to the cloud still has a long way to go. Goldman believes this bodes well for the company’s growth in the coming years. It commented:

We are particularly positive on NXT and are Buy rated given the rapid growth in cloud adoption, which has been supported by the continued evolution of the enterprise telecommunications market, and the significant demand by both public and private investors for digital infrastructure assets. We believe the company has a compelling growth profile and a proven and profitable business model, noting it trades on a growth-adjusted discount vs. peers, which we view as unjustified.

The broker has a buy rating and $13.30 price target on NextDC’s shares.

The post Goldman Sachs says these ASX 200 shares are buys appeared first on The Motley Fool Australia.

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More reading

• Leading brokers name 3 ASX shares to buy today
• Here are the 10 most shorted ASX shares this week
• ‘Still has legs’: Not too late to buy these 2 stellar ASX 200 shares, says expert
• 10 ASX 200 stocks trading ex-dividend tomorrow
• Passive income watch: Here are the ASX 200 shares that delivered some of the biggest dividend boosts this earnings season

Motley Fool contributor James Mickleboro has positions in Nextdc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Idp Education. The Motley Fool Australia has recommended Idp Education. 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 recovering from the nasty falls we saw earlier in the trading week so far this Wednesday. At the time of writing, the ASX 200 has gained a robust 0.77%, which lifts the Index back above 7,060 points.

Let’s hope this goodwill holds. But time now to dig a little deeper into these pleasing gains today by checking out the shares that are topping the ASX 200’s share trading volume charts right now, according to investing.com. 

The 3 most traded ASX 200 shares by volume this Wednesday

Telstra Group Ltd (ASX: TLS)

Today we’re starting with ASX 200 telco Telstra Group. So far today, a decent 22.09 million Telstra shares have been called up for trading.

With no fresh news or announcements out of this ASX blue chip, we have to assume this volume is the result of the bouncing around in the Telstra share price itself that has happened this session.

At present, Telstra shares are up a healthy 0.37% at $4.065 each. But Telstra climbed as high as $4.10 this morning.

Pilbara Minerals Ltd (ASX: PLS)

From TLS to PLS! Next up is the ASX 200 lithium leader Pilbara Minerals. This session has seen a sizeable 25.11 million Pilbara shares bought and sold so far. There hasn’t been any news out of Pilbara today either. But Pilbara shares have been a lot more volatile than Telstra’s.

This morning, we watched this lithium share spike to a price of $3.86 (up more than 4%). But investors have since cooled their jets, and Pilbara is now back down to $3.655 a share, up by just 0.14% for the day. This price swing probably explains this high number of shares flying around.

Syaona Mining Ltd (ASX: SYA)

Third and finally today, let’s discuss another ASX 200 lithium stock in Sayona Mining. So far this Wednesday, a notable 28.53 million Sayona shares have changed hands as it currently stands. Again, with no news out of the company itself, let’s turn to the Sayona share price itself for an explanation here. Sayona shares have also had a volatile session this Wednesday.

The company started off strong this morning and rose close to 5%. However, investors got cold feet soon afterwards and sent Sayona shares into red territory around lunchtime.

But in another change of heart, the company is back to the green this afternoon and is currently up by 1.16% at 21.75 cents a share. No wonder so many Sayona shares have been darting across the markets.

The post Here are the 3 most heavily traded ASX 200 shares on Wednesday appeared first on The Motley Fool Australia.

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More reading

• Investing in ASX 200 shares? Here’s what to expect from the US Fed next week
• Guess which ASX lithium share just rebounded 15%
• Should I load up on Telstra shares at $4 each?
• Pilbara Minerals or Core Lithium shares: Which would I buy?
• Warren Buffett’s $35 billion warning to investors

Motley Fool contributor Sebastian Bowen has positions in Telstra Group. 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 Telstra 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 Domino’s Pizza Enterprises Ltd (ASX: DMP) share price is currently down 2%. Earlier today it went below $45, hitting a 52-week low and a multi-year low.

It has been a rough year for Domino’s so far, with the company being down by over 30% in the year to date. Since September 2021, it has fallen over 70%.

During COVID-19, Domino’s was able to provide some of the food that consumers wanted beyond supermarket food, while many cafes and restaurants shut in ANZ, Japan and Europe.

But, things have really changed, which we saw in the Domino’s FY23 half-year result.

Earnings recap

In the first six months of FY23, networks sales fell 4% to $1.97 billion, with a same store sales decline of 0.6%. However, the number of stores increased by 15.8% to 3,736 stores.

Earnings before interest, tax, depreciation and amortisation (EBITDA) fell 14.3% to $182.3 million.

Earnings before interest and tax (EBIT) declined by 21.3% to $113.9 million.

The net profit after tax (NPAT) dropped 21.5% to $71.7 million and the earnings per share (EPS) declined 21.8% to 67.4 cents. The Domino’s dividend was cut by 23.8% to 67.4 cents per share.

Lower profit can hurt the Domino’s share price because how much profit a business makes is a key influence on investor thoughts.

Management blamed lower-than-expected same store sales as well as passing on inflation which hurt earnings.

Domino’s said that it acted to offset rapidly increasing inflation, with price rises being a key response. The ASX share said that higher delivery pricing, including service fees and higher bundles, reduced customer demand.

Management said that customer counts have not met expectations since December, especially in Europe and Asia, which has lowered profitability.

The company said that December’s EBIT was “particularly impacted” in Japan due to a large number of corporate stores, especially its ‘immature’ stores in regional locations.

Domino’s is now evaluating its pricing strategies.

The company also noted that there were foreign exchange headwinds. If exchange rates hadn’t changed, the company’s NPAT may have been $5 million better, according to the company. The FY23 first half also had one less trading week than the FY22 first half.

While Domino’s is looking to grow its total store count to 5,000 by 2027 and 7,250 by FY33, the business is expecting same store sales growth and new store additions to be lower than hoped in FY23.

The tricky situation

The inflation rate may have peaked, but prices aren’t exactly going down. Domino’s needs customers to buy food to do well, but it needs to sell those pizzas at a profit. Simply passing on the inflation to customers is hurting demand. The business needs scale to maximise the scale benefits.

There has always been a balance between profit and customer demand, but it’s tough to know what to do here.

I think that the geographic expansion of Domino’s can still help with longer-term earnings. Population growth could help. A normalisation of inflation could help too.

Commsec numbers suggest that by FY25, Domino’s EPS could recover to $2.30. That puts the current Domino’s share price at around 20 times FY25’s estimated earnings, which could be quite cheap by the time FY25 arrives.

The post Why did the Domino’s share price just hit a multi-year low? appeared first on The Motley Fool Australia.

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More reading

• The Domino’s boss just sold off $8 million worth of company shares. Here’s the lowdown
• These ASX 200 shares were crushed in February
• Domino’s share price lifts despite no dividend dough for new investors
• Dividend investors: 2 ASX 200 shares for decades of passive income
• Is the Domino’s share price now at bargain-buy levels?

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 positions in and has recommended Domino’s Pizza Enterprises. The Motley Fool Australia has recommended Domino’s Pizza Enterprises. 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 All Ordinaries Index (ASX: XAO) is in the green today, up 0.77% to 7,256.6 points at the time of writing.

Among the market’s blazers are three ASX All Ords tech shares bouncing back from the fall-out of Silicon Valley Bank’s (SVB) collapse.

On the flip side, two ASX All Ords tech shares are tumbling, despite only small exposures to SVB.

Let’s take a look.

ASX All Ords tech shares bouncing back today

To re-cap, SVB was a commercial lender specialising in technology companies.

It was shut down by regulators in the US last Friday.

It’s the biggest bank failure in the US since the global financial crisis (GFC).

Following the news, we’ve seen a roll-out of statements from ASX All Ords tech shares disclosing their exposure to SVB.

Of these, Life360 Inc (ASX: 360) shares are screaming 7.2% higher today to trade at $5.21 at the time of writing.

As my Fool colleague James reported last week, Life360 estimates its exposure is US$5.6 million in deposits. It also has US$75.4 million in shares of money market mutual funds invested in short-term, AAA-rated US Government treasury securities that are in SVB custodian accounts.

Life360 has updated shareholders today to confirm it “has regained access to its funds in SVB
accounts, and is transacting normally”.

Sezzle Inc (ASX: SZL) shares are also up today. The Sezzle share price is currently 53.5 cents, up 0.94%.

The buy now, pay later (BNPL) company has US$1.2 million in deposits with SVB.

Sezzle shares may have extra momentum today due to the company’s plans to list on the NASDAQ.

Finally, Xero Limited (ASX: XRO) shares are up 4% to $88.52 currently.

The accounting software company’s exposure to SVB is approximately US$5 million.

The Xero share price has steadily risen since the company revealed plans to reduce costs and drive growth. Xero shares are up 12.6% since the announcement last week.

ASX All Ords tech shares that are struggling

Meantime, Siteminder Ltd (ASX: SDR) shares are down 2.42% today to $3.425 at the time of writing.

The accommodation e-commerce platform provider updated the market on its exposure to SVB today.

After transferring some of its cash holdings to other lenders upon hearing of SVB’s collapse, SiteMinder was left with a cash exposure of A$10 million.

It also has a US$20 million revolving credit facility with SVB for contingency purposes that has not been drawn on since its initial public offering (IPO).

Today, the company said:

Following actions taken by the Federal Deposit Insurance Corporation and the Bank of England to fully protect SVB and SVBUK depositors, SiteMinder no longer expects any impact to its cash holdings.

SiteMinder has received confirmation from SVB that it will honour the Group’s US$20m revolving credit facility.

SiteMinder is working with other banks to further broaden its banking arrangements.

Redbubble Ltd (ASX: RBL) shares are also in the red today, down 4.34 to 50.7 cents at the moment.

The arts online marketplace provider has an A$1.3 million exposure to SVB.

The Redbubble share price is down 66% over the past 12 months.

The post 3 ASX All Ords tech shares rebounding strongly from the SVB fallout (and 2 still tumbling) appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has positions in Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360, Redbubble, SiteMinder, and Xero. The Motley Fool Australia has positions in and has recommended Xero. 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 enjoying a solid rebound today following yesterday’s sell-off.

In afternoon trade the ASX 200 is up 0.6%.

Tech shares are broadly outperforming, as witnessed by the 1.5% gains posted by the S&P/ASX All Technology Index (ASX: XTX), which contains some smaller companies outside of the ASX 200.

Today’s strong performance follows a positive day of trading in US markets yesterday (overnight Aussie time). The day saw the S&P 500 Index (SP: .INX) closing up 1.7% and the tech-heavy Nasdaq Composite Index (NASDAQ: .IXIC) gaining 2.1%.

And those gains, in turn, were fuelled by investors increasingly betting that the US Federal Reserve will ease off its hawkish tightening pace sooner than feared.

Why might the Fed ease its tightening policies?

A growing number of analysts believe the Fed, the world’s most watched central bank, may take a step back from its rapid rate hike path following last week’s collapse of SVB Financial Group (NASDAQ: SIVB).

The logic here is that after ramping up interest rates at a record pace from previously record lows, SVB’s collapse is indicative of wider stress amongst financial institutions. And if the Fed wants to avoid pushing other banks over the edge, it may need to hold fire on further rate increases.

As you can with the ASX 200 movements today, any potential easing by the Fed would offer up some healthy tailwinds for further gains.

On the other side of that coin, however, the latest inflation figures out of the US showed an increase in monthly consumer prices.

Data released by the Bureau of Labor Statistics showed February’s consumer price index (CPI) increased 0.4% in February and was up 6% over the past full year. That could force the Fed’s hand in delivering another big rate hike on 22 March.

So, where does that leave us?

What can ASX 200 investors expect from the Fed next week?

For some greater insight into what ASX 200 investors can expect next Thursday on the heels of the Fed’s announcement, we turn to the experts (courtesy of Bloomberg).

Tom Essaye, a former Merrill Lynch trader, said a 0.25% hike still looks to be on the cards while earlier expectations of a 0.50% rate hike are unlikely:

Given the bank troubles, this [inflation] report isn’t bad enough to put 50 bps back on the table, but if the Fed wants to maintain credibility on inflation, then this report says they have to hike again next week and not signal they are done.

Wolf von Rotberg, equity strategist at Bank J Safra Sarasin also expects the Fed will have to scale back to a 0.25% increase.

According to von Roberg:

The CPI number is no game changer. After the events last week, a 50bps appeared unlikely going into the data print today and the slightly stronger than expected core inflation print puts speculation of a Fed pause to a rest.

The Fed is on track for another 25bps hike next week. Equities should rebound somewhat as the Fed becomes more predictable for now. But the impact from higher rates on the economy is just starting to be felt and will likely become more and more visible as the year moves on.

Ian Lyngen, rates strategist at BMO Capital Markets is on the fence about whether we’ll see a pause or a 0.25% increase.

“Overall, this is an inflation update that, taken as a sole input, would suggest that a 25 bp hike next week is a foregone conclusion,” Lyngen said. “Alas, the regional banking stress leaves next week’s decision as a wild card until there is greater clarity on the success of limiting the contagion to the rest of the banking sector from SVB/Signature.”

Meanwhile, Susannah Streeter, head of money and markets at Hargreaves Lansdown, thinks the SVB collapse could see the Fed take a breather. That would likely see another positive day of trading on the ASX 200.

“Policymakers may still feel forced to press pause on rates, despite evidence the hot inflation is still a risk, unwilling to be blamed for making a bad situation worse,” Streeter said.

“While smaller banks remain under pressure, there are concerns that bigger banks could become more risk averse in lending, which could dip the economy into a sharper downturn.”

There you have it.

Most likely next Thursday morning ASX 200 investors will find the Fed has raised rates by 0.25%. Very few experts are now forecasting a 0.50% increase, with some expecting the central bank to pause its tightening policies to assess the fallout from SVB.

The post Investing in ASX 200 shares? Here’s what to expect from the US Fed next week appeared first on The Motley Fool Australia.

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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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The S&P/ASX 200 Materials Index (ASX: XMJ) is up 0.85% in late afternoon trading, but this ASX lithium share is outperforming the index.

Atlantic Lithium Ltd (ASX: A11) shares soared 14.6% in earlier trade today from 41 to 47 cents apiece. However, the company’s share price has since given back some of its gains and is now up 8.5% to 44.5 cents. For perspective, the S&P/ASX 200 Index (ASX: XJO) is currently 0.68% higher.

So why is this ASX lithium share having such a top run today?

What’s going on?

Atlantic Lithium is developing the Ewoyaa lithium project in Ghana, West Africa. This project is funded via an agreement with Piedmont Lithium Inc (ASX: PLL).

Despite today’s gains, Atlantic Lithium’s share price has shed a mammoth 34% in the past month. It seems the company has recently been exposed to a short attack from Blue Orca.

However, as my Foolish colleague James reported today, it may be that short sellers are now closing their positions or investors believe Atlantic Lithium shares were sold off unfairly amid the attack.

Last week, Blue Orca alleged in a short-seller report that Atlantic Lithium derived key Ghana mining licenses by “making secret payments” and “promises of payment” to the immediate family of a high-level Ghana politician.

This led to both Atlantic Lithium and its partner Piedmont Lithium entering a trading halt last week.

However, on Friday, Atlantic Lithium denied the claims and described Blur Orca’s report as “false and misleading”.

Atlantic Lithium said:

The company holds valid prospecting licences with operating permits for all of its current activities, in accordance with the Ghanaian government and the Minerals Commission’s requirements, and outrightly refutes the allegations of impropriety made by the report.

Atlantic Lithium cautions investors not to make decisions based on the report, which it considers factually untrue.

Share price snapshot

The Atlantic Lithium share price has lost 23% in the last year.

For perspective, the ASX 200 has slipped 0.56% in the past 12 months.

This ASX lithium share has a market capitalisation of nearly $269 billion based on the current share price.

The post Guess which ASX lithium share just rebounded 15% appeared first on The Motley Fool Australia.

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More reading

• Warren Buffett’s $35 billion warning to investors
• Woodside share price sinks as oil remains under pressure
• Why Atlantic Lithium, Life360, Neuren, and Whitehaven Coal shares are charging higher
• 5 things to watch on the ASX 200 on Wednesday
• Here are the 3 most heavily traded ASX 200 shares on Tuesday

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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