Category: Stock Market

The BrainChip Holdings Ltd (ASX: BRN) share price is tumbling today despite no news being released from the technology company.

So far today, the BrainChip share price has reached an intraday low of 50 cents. That’s a 15.25% fall from yesterday’s close and a new 52-week trough for the small-cap ASX technology share.

BrainChip shares are currently trading for 51.5 cents, down 12.7%.

The price movement triggered an ASX price query but BrainChip said it could not explain the crash.

The company confirmed insiders had no information that has not been announced to the market that might explain the share price crash or high trading volumes.

According to the ASX website, more than 23.2 million BrainChip shares have changed hands today.

That is almost three times BrainChip’s average 30-day trading volume of 7.96 million shares.

BrainChip share price volatility continues

As you can see from the chart below, the BrainChip share price is highly volatile. Its performance over the past year probably represents the heartbeat of many shareholders, with erratic ups and downs.

Let’s take a look at what’s happening at BrainChip and how its share price has been travelling.

Over the past 12 months, the BrainChip share price has trended down from a high of $1.54 to a low of 50 cents today. Over the period, the shares have lost more than 60% of their value.

The last time we heard any price-sensitive news was on 30 January when the company released a quarterly update.

Over the three months to 31 December, BrainChip continued to operate at a loss with a cash outflow of US$1.9 million. It reported cash receipts from customers of US$1.164 million.

It ended the period with a cash balance of US$23.1 million. The BrainChip share price tumbled 2.3% on the day.

Yesterday, my colleague James outlined the bull and bear case for investors on BrainChip shares.

What does BrainChip do again?

BrainChip is an ASX artificial intelligence (AI) share.

The company has developed the world’s first commercial neuromorphic processor, called Akida.

As my colleague Kate reports, Akida is a spiking neural network that can be integrated into computer chips to deliver AI reasoning and conclusions from sensor-captured data. 

It can be used in vision and audio applications in various industries, including automotive, robotics, aerospace, and cybersecurity. 

BrainChip shipped its first production chips in 2021 and is now seeking to manufacture at volume.

BrainChip has a market capitalisation of just over $1 billion.

The post Why is the BrainChip share price crashing 15% on Wednesday? appeared first on The Motley Fool Australia.

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More reading

• BrainChip shares: The bull and bear case
• Could 2023 be the year these ASX AI stocks come roaring back?
• Why has the BrainChip share price crashed 19% in 2023?
• Why Brainchip, Core Lithium, IAG, and Nick Scali shares are dropping today
• These are the 10 most shorted ASX shares

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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CSL Limited (ASX: CSL) shares have been caught up in the broad market weakness on Wednesday.

In afternoon trade, the biotherapeutics giant’s shares are down almost 1% to $304.97.

This means CSL’s shares have given back the gains they made yesterday in response to a solid half year update.

Should you buy CSL shares?

The team at Morgans has been running the rule over the result and has given it the thumbs up.

In response, the broker has retained its add rating and lifted its price target by 8% to $337.92. This implies potential upside of approximately 11% from current levels.

What did the broker say?

While Morgans believes that CSL’s half year result was a touch mix, it has seen enough to remain very positive on the company. It commented:

1H results were mixed, with underlying constant currency (cc) profit a little light (+9%), but on strong, in-line revenue growth (+25%). Record plasma collections (+36%) propelled plasma products (Ig, +19%) and Behring sales (+11%), while Seqirus posted high-single digit growth despite reduced immunisation rates, and newly acquired Vifor was solid (+15%).

Underlying earnings were driven mainly by Behring (US$1,875m; 55% of op income) as plasma collections increased (+36%) and now stand >10% above preCOVID levels, driving plasma-based product sales (Immunoglobin (Ig) +19%; Albumin +11%), but some non-plasma-based products managed to perform much better (Hemophilia recombinants +22%; Specialty peri-op bleeds +8%).

Looking ahead, the broker has upgraded its earnings estimates following this update and its valuation accordingly. It concludes:

Our FY23-25 earnings increase modestly (up to c3%), mainly on lower net interest expense, higher Behring and Vifor sales, partially offset by lowered GM. We roll forward multiples, with our blended DCF, PE and EV/EBITDA based price target increasing to A$337.92 (A$312.21 previously).

The post Are CSL shares a buy following the ASX 200 giant’s latest results? appeared first on The Motley Fool Australia.

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More reading

• Everything you need to know about the boosted CSL dividend
• CSL share price lifts on half-year earnings beat
• CSL share price on watch amid US$1.6b profit
• 5 things to watch on the ASX 200 on Tuesday
• How I’d generate a $10,000 second income from CSL shares

Motley Fool contributor James Mickleboro has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. 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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Investors looking for a high yielding S&P/ASX 300 Index (ASX: XKO) dividend share may want to investigate Adairs Ltd (ASX: ADH).

The leading home furnishings specialist retail stock has three store brands – Adairs, Mocka and Focus on Furniture.

As you can see in the chart below, the Adairs share price has been a strong performer so far in 2023, up 8.2% since the closing bell on 30 December.

At the current share price of $2.38, the ASX 300 company has a market cap of $405 million and pays a trailing, fully franked dividend yield of 7.6%.

With the tax benefits offered via the franking credits, that could work out to a grossed-up dividend yield of 11%, depending on an investor’s other income and tax obligations.

Is this the greatest ASX 300 dividend share bargain?

Adairs isn’t the only quality ASX 300 share with high-yielding dividends.

But I believe it’s well worth considering for investors seeking potential share price growth and a historically reliable passive income stream.

Since listing on the ASX in June 2015, the retailer has made two annual dividend payments every year.

The company has a strong record of value creation, with experienced management and a growing e-commerce footprint. One which served it well during the pandemic lockdowns.

In the current financial year, the company announced at its annual general meeting (held in late 2022) that sales during the first four months of the 2023 financial year had increased 7.6% year on year.

And the growth outlook looks solid.

The ASX 300 dividend share plans to open two or three new Focus stores and four to six new Adairs stores in FY23.

What are the risks?

Of course, no investment is without risk.

One of the biggest potential tailwinds could come if inflation remains above expectations and the RBA is forced to continue increasing interest rates aggressively.

That could see consumers cut back on discretionary spending, including home furnishings. That, in turn, could see the ASX 300 dividend share book smaller profits and reduce its dividend payouts.

Indeed, at the end of January, Goldman Sachs downgraded Adairs from a buy to a neutral rating.

Still, the broker’s analysts have a positive outlook for the business, saying, “We view the core ADH business as well-placed to deliver solid medium-term growth and should prove resilient given a highly loyal customer base.”

And despite the neutral rating, Goldman has a target price of $3.15 for Adairs’ shares. That’s a whopping 32% above the current price.

Which makes Adairs a potentially great ASX 300 dividend share bargain.

The post 11% dividend yield! Is this the greatest ASX 300 bargain? appeared first on The Motley Fool Australia.

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More reading

• 2 ASX dividend shares that could generate $1,000 annual income with just $10,000
• This ASX 300 dividend share is projected to pay a 14% yield by 2025
• Here’s how I’d start building a second income this February, for $30 a week
• How I’d invest $200 a month in ASX shares to make a $20,000 passive income for life
• Which ASX dividend shares I’d buy now to target $50,000 of annual passive income

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 Adairs. The Motley Fool Australia has positions in and has recommended Adairs. 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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Despite being the most shorted share on the Australian share market, the Flight Centre Travel Group Ltd (ASX: FLT) share price has been on fire this year.

Since the start of 2023, the travel agent’s shares have risen an impressive 26%.

Investors appear to be betting on a strong performance from Flight Centre in FY 2023.

This could make it worth watching Flight Centre shares closely next week when the company releases its half year results on 22 February.

Ahead of the release, let’s take a look at what the market is expecting.

What is the market expecting from Flight Centre?

Well, the good news is that a lot is already known about Flight Centre’s performance during the half.

That’s because earlier this month the company released a trading update to support its capital raising and revealed a performance ahead of consensus estimates.

Flight Centre revealed that it expects to report total transaction value (TTV) of $9.9 billion, group revenue of $1.0 billion, and group underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $95 million.

However, there are a few things that could be worth looking out for outside these metrics.

For example, according to a note out of Morgans, its analysts are looking forward to digging deeper into its earnings.

The broker suspects that the company’s Corporate business could be delivering the goods and contributing strongly to its earnings. It commented:

The 1H23 beat to consensus was led by the strong profitability of Corporate. This business is on track to deliver record TTV in FY23 (MorgansF is ~A$11.6bn vs pre-COVID of A$9.0bn). November EBITDA was in line with the monthly run rate implied at the AGM (A$14.5m/month). December EBITDA was lower given usual seasonality. If we conservatively assume December EBITDA was A$7.5m, this would equate to 1H23 Corporate EBITDA of ~A$80m. FLT is continuing to gain market share through high customer retention rates and material new account wins.

And given how Flight Centre’s earnings are expected to be heavily weighted to the second half, Morgans is likely to be looking out for another update on its guidance. It added:

FLT has provided FY23 EBITDA guidance of A$250-280m. This was below Morgans previous forecast of A$289.5m. However it was largely at the midpoint of FactSet consensus of A$266.3m. This guidance is prior to any benefits from the acquisition. The midpoint of guidance implies a 35%/65% 1H vs 2H split, which is broadly in line with FLT’s historical seasonality.

The post Own Flight Centre shares? Here’s what the market expects from its half year results appeared first on The Motley Fool Australia.

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More reading

• Are whales dipping in and out of this ASX 200 travel share?
• Someone just bought $22 million of Flight Centre shares. Here’s what we know
• Here are the 10 most shorted ASX shares
• Why has the Flight Centre share price soared 20% in a month?
• Buy Flight Centre shares now for 13% upside: Macquarie

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 recommended Flight Centre Travel 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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It hasn’t been a great day for the Endeavour Group Ltd (ASX: EDV) share price so far this Wednesday. At the time of writing, Endeavour shares have fallen by a nasty 1.83%, down to $6.96 each. That’s even worse than the S&P/ASX 200 Index (ASX: XJO), which is presently down by a far tamer 1% to 7,356 points.

But even after this drop, shares in the alcohol retailer and hotels operator remain well above where they closed at last week ($6.82 a share). Investors were mightily impressed with the earnings report the company delivered on Monday, it seems.

As we covered at the time, Endeavour delivered its earnings results for the FY2023 half-year ending 31 December 2022 on Monday.

It was objectively a stellar earnings report. Endeavour announced a 17% rise in after-tax profits to $364 million, while sales rose by 2.5% to $6.5 billion. Earnings per share (EPS) was also up, by 16.7% to 20.3 cents This enabled Endeavour to boost its interim dividend by 14.4% over last year to 14.3 cents per share.

Monday saw the Endeavour share price rise 4.11% on these earnings, but the company has pulled back slightly over yesterday and so far today:

So with these latest earnings in full view, many investors might be wondering if the company’s shares are worth buying today.

Are Endeavour shares a post-earnings buy today?

Well, one ASX expert who thinks the shares are looking tempting is broker Morgans. As we covered earlier this week, Morgans liked what it saw in the company’s earnings report.

The broker has upgraded its rating on Endeavour to a buy, with an upped 12-month share price target of $7.80. If realised, this would result in a further upside of more than 12% over the coming year.

Morgans liked that Endeavour’s earnings were well ahead of expectations, and singled out the company’s retail margins as a positive point:

The result highlighted management’s ability to control costs despite inflationary pressures… While the regulatory environment remains uncertain, on balance, we think the risks lie to the upside with the underlying business performing well.

So this ASX broker is one expert who clearly reckons the Endeavour share price is worth buying today. We’ll have to see what the next 12 months and beyond holds in store for the company.

At the current Endeavour share price, this ASX 200 consumer staples stock has a market capitalisation of $12.46 billion, with a trailing dividend yield of 2.21%.

The post Should I buy Endeavour shares following the ASX 200 company’s stellar results? appeared first on The Motley Fool Australia.

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More reading

• 4 ASX 200 stocks smashing new 52-week highs on Wednesday
• Stop mucking about and buy these 4 ASX shares right now: Morgans
• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares today
• Leading brokers name 3 ASX shares to buy 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 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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Woodside Energy Group Ltd (ASX: WDS) shares are having a tough day on Wednesday.

In afternoon trade, the energy giant’s shares are down 2.5% to $35.34.

While this is disappointing, it is potentially good news for income investors.

That’s because every time to Woodside share price pulls back, the yield on offer with its shares gets larger.

And large it certainly is!

The Woodside dividend

According to a note out of Citi, its analysts are expecting the company to pay a $2.99 per share fully franked dividend in FY 2023.

Based on the current Woodside share price, this implies a potential yield of approximately 8.5% for investors. This is significantly better than what you’ll find with savings accounts, term deposits, and the market average dividend yield.

If Citi is on the money with its forecast, it also means that to generate $20,000 in passive income from its shares, you would need to make an investment of a little under $250,000.

This is of course a large number and few investors have that available to invest. But there’s nothing to stop you from making it a long term target.

Although past performance is not a guarantee of future returns, the share market has historically provided investors with a return averaging 10% per annum.

If the market were to do the same again in the future and you were able to match the market return, you could grow your portfolio from zero to $250,000 by investing $10,000 each year for a touch over 12 years.

At that point, you would have grown your portfolio to the desired amount and then you can switch your focus to income and sit back and watch your passive income come rolling in.

The post How I’d generate a $20,000 second income from Woodside shares appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• Woodside share price turns red following production update
• Here are the top 10 ASX 200 shares today
• Why are ASX 200 energy stocks like Woodside having such a stellar start to the week?
• Even Joe Biden sees a lengthy future for ASX 200 oil stocks

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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1) It’s turning out to be a tough day for the S&P/ASX 200 Index (ASX: XJO), down 92 points or 1.2% in early afternoon Wednesday trade.

The big four banks are doing most of the damage, coming after Commonwealth Bank of Australia (ASX: CBA) reported first half results. More on that below.

The biggest faller in the ASX 200 is the Corporate Travel Management Ltd (ASX: CTD) share price, down 8% to $15.86 despite guiding to a record full year profit and saying “travel demand remains strong with no signs of macroeconomic factors impacting the recovery.” 

Based on the share price reaction, the market sees things differently. Corporate Travel Management shares have plunged 38% from their 52-week high despite a very strong travel recovery. Animal spirits and speculation may have seen Corporate Travel Management shares previously get ahead of themselves. Investing can be tough. 

2) Tough crowd these stock market investors, with the Commonwealth Bank of Australia share price falling 6.1% despite it reporting a 9% lift in cash profit and a hefty 20% hike in its interim dividend.

According to the AFR, investment bank Barrenjoey “has warned analysts are likely to downgrade profit margin forecasts for CBA after its net interest margin – as a key measure of profitability – peaked in October.”

“Given CBA is trading on 19x P/E, we expect the shares to be soft today.”

I’ve been wrong on CBA shares for as long as I can remember. More recently, in August last year, with the CBA share price trading around $100, I said it looked “downright expensive.”

That didn’t stop CBA shares recently hitting an all time high of $111, although with the CBA share price now trading at around $102 after today’s sell off, and Barenjoey calling out the high valuation, I feel a fraction closer to the mark.

Putting the CBA results to one side, from a “Team Australia” perspective, it was heartening to see CEO Matt Comyn say consumer spend is remaining resilient, with the bank remaining optimistic that a soft landing for the Australian economy can be achieved.

3) This is in stark contrast to outspoken columnist Christopher Joye who, writing in the AFR, recently said “in their quest to crush inflation, central bankers are going to crush everything.”

Joye says the number one focus of central bankers is demand destruction as they are singularly committed to creating job losses to reduce elevated wage growth.

“The bottom line is that this is bad news for everything except cash. It means lower earnings and income growth, deeper economic retrenchments, and lower valuations as the risk-free hurdle rates inexorably rise. It means the coming default cycle is probably going to be the worst we have seen since the 1991 recession, which will be terrible for anyone who has lent money to risky borrowers or invested in junk debt.”

This is hardly the stuff of soft landings.

So who is right? CBA or C Joye?

I have no idea. The optimist in me struggles to think we’re heading for a deep recession. Like CBA, I see consumers still spending and restaurants still busy. The unemployment rate remains hovering near half-century lows at just 3.5%.

Yet storm clouds are ahead. 

With the Reserve Bank of Australia’s latest cash rate hike, which marks the ninth increase since May, households are preparing themselves for increased mortgage repayments.

Consumer confidence has plummeted, sinking to its lowest levels since the early days of the pandemic. 

The AFR reports today that TD Securities is tipping the RBA to take its terminal rate to 4.35%, a full 100 basis points – or four more lots of 25 basis point hikes – ahead of the current cash rate of 3.35%.

That just might “crush everything,” including CBA’s prediction of a soft landing.

4) Meanwhile, at Wesfarmers Ltd (ASX: WES), consumers are continuing to spend up, with sales at value-orientated retailers Kmart and Target up an impressive 24% for the first half of FY23. Wesfarmers also reported sales growth at Bunnings and Officeworks, albeit more modest single-digit percentage gains. 

In aggregate, the conglomerate reported profits up 14% and increased its interim fully franked dividend by 10% to 88 cents per share. 

Like others, they see the storm clouds ahead, although Wesfarmers says its “strong value credentials and low-cost operating models mean they are well positioned to meet changing customer demand as customers adjust to cost pressures.”

On a day when the ASX 200 is taking it on the chin, the Wesfarmers share price is up 1% to $49.20 where it trades on around 23 times forecast earnings and on a forecast fully franked dividend yield of 3.7%. 

Like a number of high quality ASX blue chips, Wesfarmers shares are still trading on a valuation that’s appropriate for a lower interest rate environment. 

If TD Securities are right and the RBA cash rate gets as high as 4.35%, by comparison to Wesfarmers shares, cash in the bank will look very attractive. 

It’s hard to see Wesfarmers shares being “crushed” but the risks might be more skewed to the downside. A re-rating to a forward P/E of 20 times implies a Wesfarmers share price of $43.50. 

5) One stock whose valuation continues to defy conventional logic is healthcare imaging software company Pro Medicus Limited (ASX: PME). 

The company reported solid first half revenue growth, up 28% to $57 million, with net profit up 32% to $27 million.

Pro Medicus has been winning long-term contracts with US healthcare companies. Such a high level of recurring revenue, coupled with clear operating leverage as demonstrated by a near 50% net profit margin, would deservedly translate to a premium valuation for Pro Medicus. The company is debt-free and sits on cash reserves and other financial assets of $94.5 million.

For a company with around $100 million of annual sales, Pro Medicus sports an eye-watering market capitalisation of $6.73 billion. It trades on roughly 116 times forecast earnings. 

If Pro Medicus grew profits at 25% per year for the next five years – no mean feat – my back of the envelope calculations would have Pro Medicus shares trading at 32 times earnings, something far more palatable and arguably reasonable at that stage. 

In effect, growth for the next five years could arguably already be priced into Pro Medicus shares. 

Despite all that, I still hold the shares. It’s a risk I’m willing to take for one of the highest quality companies trading on the ASX. 

As investing legend, 99 year old Charlie Munger has once said…

“The first rule of compounding: Never interrupt it unnecessarily.”

Pro Medicus is a core holding of the Hyperion Small Growth Companies Fund. Its stated philosophy is…

“The highest proven quality businesses with the strongest competitive advantages and organic growth opportunities produce superior shareholder returns over the long term.”

Whilst I hope to hold Pro Medicus shares for many years to come, I realise I’m unlikely to see the huge gains I’ve seen since first buying the shares at just $1.50. 

The post ASX 200 in freefall as CBA’s prediction of a soft landing might have just been torpedoed by huge interest rate call appeared first on The Motley Fool Australia.

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More reading

• Why CBA, Corporate Travel Management, Treasury Wine, and Westpac shares are dropping
• 3 ASX 200 shares on the move amid strong earnings updates
• Why Cochlear, GUD, Netwealth, and Wesfarmers shares are charging higher
• Everything you need to know about the boosted Wesfarmers dividend
• Why is the ANZ share price tumbling on Wednesday?

Motley Fool contributor Bruce Jackson has positions in Pro Medicus. 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 and Wesfarmers. The Motley Fool Australia has recommended Corporate Travel Management. 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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Woolworths Group Ltd (ASX: WOW) shares will be worth watching closely next week.

That’s because the retail giant is scheduled to release its half year result on 22 February.

Let’s take a look to see what the market is expecting from the company.

What is the market expecting from Woolworths?

It’s fair to say that the market is expecting a strong result from the retailer.

For example, according to a note out of Goldman Sachs, its analysts are expecting Woolworths to outperform rival Coles Group Ltd (ASX: COL). It is forecasting earnings before interest and tax (EBIT) growth of 12% for Woolworths and flat earnings for Coles.

This strong earnings growth is expected to be underpinned largely by margin expansion in the supermarket business and group sales growth of 3.5%. The broker explained:

In 1H23, we expect group sales growth of 3.5% but EBIT growth of 12% on higher EBIT margins. Specifically for Australia Supermarkets, we expect sales growth of 2.9% with comps sales of 2.3% (2Q23 comps sales 6.0%) and EBIT growth of 16.7% YoY due to 70bps of EBIT margin expansion to 5.8%. Compared to COL, we expect that GPM will hold largely steady due to more personalized offers focusing on targeted promotions, while lower COVID cost with no material implementation cost step-up on the supply chain should provide a tailwind for margins. We also increase Big W EBIT margin to ~1.9% (vs ~1.3% previously) due to still healthy trading in 1H23 observed for consumer spending.

Goldman also suggested that investors look out for any commentary on its recently announced strategy. It added:

We see strategic merit in management’s announced strategy to amalgamate Big W and MyDeal with Petspiration (following the planned acquisition of the latter, which is expected to close in mid 2023) into the “Everyday Needs” part of the business, though execution will be the focus given none of these businesses are clear leaders in their sub-segment.

The post Own Woolworths shares? Here’s what the market is expecting from its half year results appeared first on The Motley Fool Australia.

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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 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 S&P/ASX 200 Index (ASX: XJO) is sliding lower today, down 1.1% in early afternoon trade.

This comes following the release of the latest inflation data out of the United States.

That resulted in a mixed day in US markets (overnight Aussie time), which saw the Nasdaq Composite Index (NASDAQ: .IXIC) close up 0.6% while the Dow Jones Industrial Average Index (DJX: .DJI) closed 0.5% lower.

At the time of writing, futures indicate all the major US exchanges will come under selling pressure tomorrow. Which, in turn, could throw up some short-term headwinds for ASX 200 shares.

Because, like it or not, fast-rising prices and the resulting central bank tightening in the world’s top economy have a major spillover effect on the ASX 200’s performance.

ASX 200 dips as US inflation remains concerning

Looking on the positive side, annual inflation in the US edged lower to 6.4%, down from 6.5% in December. And well down from the 9.1% figures posted in June.

But even after seven months of declines, 6.4% is way above the Federal Reserve’s 2% target range.

Which means ASX 200 investors can expect another interest rate rise from the Fed when its board meets again in March. And that most likely won’t be the last hike in 2023 either.

Indeed, on Monday, before the latest CPI data was released, Fed governor Michelle Bowman said, “I expect we’ll continue to increase the federal funds rate because we have to bring inflation back down to our 2% goal, and in order to do that we need to bring demand and supply into better balance.”

ASX 200 shares have broadly come roaring back in 2023. Despite the higher interest rate environment in Australia, the US, and most of the developed world, the benchmark index is up 4.4% year to date.

But if rates keep ratcheting higher, some sectors, like consumer discretionary stocks, could come under renewed pressure as households begin to feel the pinch.

Growth stocks, priced with future earnings in mind, could also get hit with renewed headwinds.

What the experts are saying

“Inflation slowed again, but the details show the Fed’s fight is far from over. Services inflation is still fiery hot, and that’s the kind of inflation the Fed is trying to get under control,” Callie Cox, US investment analyst at eToro said.

Cox recommended caution to investors in US equities. Advice that would likely also serve ASX 200 investors well.

“The inflation crisis isn’t over yet, and as we’ve seen recently, it’s easy for markets to get carried away. We may not see new highs until inflation is fully under control,” she said.

Most analysts are convinced the Federal Open Market Committee (FOMC) will raise rates at both of its next two meetings. Consensus expectations are for a 0.25% increase each time.

Many also believe we could see the world’s most influential central bank begin to ease by the end of the year, which could see the ASX 200 finish 2023 with a bang.

According to Morgan Stanley’s Ellen Zentner (quoted by The Australian Financial Review):

We expect the Fed tightening path to be largely set through the May FOMC, with a 25bp hike at each of the upcoming meetings. Beyond May, however, a slowing labour market and more moderate inflation outcomes should set the stage for a stop in the tightening cycle and an eventual first rate cut in December.

Oxford Economics’ Ryan Sweet added:

All told, risks are weighted toward inflation being higher in the first half of this year than we anticipated in the February baseline. Still, inflation should moderate more noticeably in the second half of this year as goods disinflation intensifies and services inflation peaks.

The post Why the latest US inflation figures matter to ASX 200 investors appeared first on The Motley Fool Australia.

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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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is out of form and has dropped deep into the red. At the time of writing, the benchmark index is down 1.2% to 7,338.5 points.

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

Commonwealth Bank of Australia (ASX: CBA)

The CBA share price is down 6% to $102.30. Although Australia’s largest bank delivered a strong half year result, there are concerns that its net interest margin has peaked well ahead of expectations. Goldman Sachs wasn’t expecting the peak for another year, which has caused alarm bells to ring.

Corporate Travel Management Ltd (ASX: CTD)

The Corporate Travel Management share price is down 7% to $16.02. This follows the release of the corporate travel booker’s half year results. Corporate Travel Management reported a 79% increase in revenue to $291.9 million and a 182% jump in underlying EBITDA to $51.3 million. As strong as this was, the latter was still short of market expectations.

Treasury Wine Estates Ltd (ASX: TWE)

The Treasury Wine share price is down over 5% to $13.55. This morning, this wine giant posted a 1.4% increase in half year sales and a 17.2% increase in EBITS. However, once again, the market was expecting a stronger result. Treasury Wine’s sales were 8% lower than consensus estimates due largely to Premium Brands weakness.

Westpac Banking Corp (ASX: WBC)

The Westpac share price is down 5% to $22.73. Investors have been selling Westpac and other bank shares today following the release of Commonwealth Bank’s results. With Australia’s largest bank’s net interest margin believed to have peaked ahead of expectations, investors appear concerned that this could be the same for the rest of the sector.

The post Why CBA, Corporate Travel Management, Treasury Wine, and Westpac shares are dropping appeared first on The Motley Fool Australia.

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More reading

• Why is the ANZ share price tumbling on Wednesday?
• Why did the CBA share price just sink almost 6%?
• Everything you need to know about the supersized CBA dividend
• Corporate Travel share price tumbles despite record earnings forecast
• Treasury Wine share price sinks 7% despite solid earnings growth

Motley Fool contributor James Mickleboro has positions in 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 recommended Corporate Travel Management, Treasury Wine Estates, 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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