Category: Stock Market

The PointsBet Holdings Ltd (ASX: PBH) share price has been a strong performer on Wednesday.

In afternoon trade, the sports betting company’s shares are up 10% to $2.06.

This compares favourably to the ASX 200 index, which is up a solid 1.7% this afternoon.

Why is the PointsBet share price jumping?

The catalyst for the rise in the PointsBet share price on Wednesday has been a rebound in the tech sector following a strong night on the NASDAQ index.

This has seen the S&P/ASX All Technology index rise an impressive 4%, with many beaten down loss-making tech shares rising even strongly.

This includes Life360 Inc (ASX: 360), Megaport Ltd (ASX: MP1), and Zip Co Ltd (ASX: ZIP) shares, which are all by 5% or more today.

Can PointsBet keep rising?

The good news for investors is that one leading broker still sees significant upside potential for the PointsBet share price over the next 12 months.

According to a recent note out of Bell Potter, its analysts have a speculative buy rating and $5.25 price target on its shares. This implies staggering potential upside of over 150% for investors between now and this time next year.

This could make PointsBet one to consider if you have a higher than average tolerance for risk.

The post Here’s why the PointsBet share price is jumping 10% today appeared first on The Motley Fool Australia.

.

More reading

• These were the 5 worst-performing ASX All Ords shares in September
• Here are the top 10 ASX 200 shares today
• PointsBet share price sinks despite US expansion update
• 8 ASX 200 shares got kicked out of the index on Monday. How are they tracking?
• The ASX 200 is getting a shakeup today. Here’s the tea

Motley Fool contributor James Mickleboro has positions in Life360, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360, Inc., MEGAPORT FPO, and Pointsbet Holdings Ltd. The Motley Fool Australia has recommended MEGAPORT FPO and Pointsbet Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/g6LEaDA

It has been another positive day for the S&P/ASX 200 Index (ASX: XJO). In afternoon trade, the benchmark index is up a further 1.65% to 6,809 points.

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

Commonwealth Bank of Australia (ASX: CBA)

The CBA share price is up over 2.5% to $97.27. Investors have been buying CBA and the rest of the big four banks today after the market responded positively to the RBA’s smaller than expected cash rate hike. Investors appear to believe this hike will boost margins but lessen recession risks.

Flight Centre Travel Group Ltd (ASX: FLT)

The Flight Centre share price is up over 4% to $15.25. This morning analysts at Ord Minnett upgraded the travel agent’s shares to a hold rating from sell with a $14.26 price target. The broker made the move on valuation grounds after significant weakness in recent months.

Life360 Inc (ASX: 360)

The Life360 share price is up 4.5% to $5.38. Investors have been scrambling to buy this location technology company’s shares following a rebound in the tech sector and a bullish broker note out of Goldman Sachs. The latter saw the broker initiate coverage on Life360’s shares with a buy rating and $7.50 price target.

Link Administration Holdings Ltd (ASX: LNK)

The Link share price is up 6% to $3.10. This has been driven by news that Dye & Durham has returned with a takeover offer for parts of the Link business. After rejecting two proposals in recent days, Link is now considering a non-binding, conditional and indicative proposal to acquire Link’s Corporate Markets BCM businesses for total cash consideration of $1.27 billion on a cash and debt free basis.

The post Why CBA, Flight Centre, Life360, and Link shares are storming higher appeared first on The Motley Fool Australia.

.

More reading

• Can the CBA share price regain its $100 crown in October?
• Flight Centre shares: Buy, hold, or fold?
• Link share price jumps 7% on new buyout offer
• Why the Life360 share price is up 17% in two days and could keep rising
• Here’s how ASX 200 bank shares fared in the shocker month of September

Motley Fool contributor James Mickleboro has positions in Life360, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360, Inc. and Link Administration Holdings Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/ZrQhS8K

In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record another solid gain. At the time of writing, the benchmark index is up 1.6% to 6,808 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are dropping:

Cronos Australia Ltd (ASX: CAU)

The Cronos Australia share price is down a further 1.5% to 66.5 cents. This means that the medicinal cannabis company’s shares are now down over 5% this week despite there being no news out of it. However, the Cronos Australia share price has been on fire in recent weeks, so this could have been driven by profit taking.

Pilbara Minerals Ltd (ASX: PLS)

The Pilbara Minerals share price is down over 1% to $5.05. This morning the team at UBS retained its sell rating on the lithium miner’s shares with a slightly increased price target of $2.65. This price target is significantly lower than where Pilbara Minerals’ shares trade currently, suggesting major downside risk.

Sayona Mining Ltd (ASX: SYA)

The Sayona Mining share price is down 3% to 24.7 cents. This is despite the lithium developer providing an update on its Moblan Lithium Project in Quebec, Canada. Sayona has launched the pre-feasibility study for the project and is expecting it to be complete by May next year. Weakness in the lithium industry appears to have offset this.

Strike Energy Ltd (ASX: STX)

The Strike Energy share price is down 2% to 25 cents. This is despite the oil and gas exploration company providing an update on testing operations at its South Erregulla gas discoveries in EP503. Gas composition has initially been measured as a high-quality dry gas with 4-5% CO2 and negligible other measured impurities.

The post Why Cronos Australia, Pilbara Minerals, Sayona Mining, and Strike Energy are dropping appeared first on The Motley Fool Australia.

.

More reading

• How did the Pilbara Minerals share price surge 25% during the ‘worst month of the year’?
• These were the best-performing ASX 200 shares in the first quarter of FY23
• Here are the top 10 ASX 200 shares today
• RBA shock fuels the ASX 200 stock market rally… plenty of bargains on offer for beleaguered yet emboldened investors
• Government tips Aussie lithium exports to surge 180%. Which ASX shares are in on the action?

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.

from The Motley Fool Australia https://ift.tt/QhZj1K5

The S&P/ASX 200 Index (ASX: XJO) has struggled this year, falling 10% year to date, but one sector has been outperforming. The S&P/ASX 200 Energy Index (ASX: XEJ) has gained a whopping 34% in 2022, partially bolstered by surging coal prices. And the party’s not over yet for shares in ASX 200 metallurgical coal producer Coronado Global Resources Inc (ASX: CRN), according to one expert.

The stock has gained close to 43% year to date to trade at $1.84 right now.

It also boasts a monumental dividend yield of 21.5%, having paid its Aussie investors a total of approximately 39.6 cents in dividends this year.

Most of that has originated from the company’s free cash flows, which have surged amid high coal prices and demand for the commodity.

Indeed, discounting the only offering not born from free cash flows – an 8.25 cent special dividend offered on the back of a notes offering – the company would still be trading with a 17% yield.

But are its sky-high payouts doomed to come to an end? Let’s take a look.

Can this ASX 200 share sustain its 21% dividend yield?

The share price of Coronado Global Resources has soared this year alongside the company’s earnings.

It posted close to US$2 billion of revenue for the first half of 2022 – up 147% year-on-year. Its adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA) also rocketed 3,204% to US$849 million.

Topping it off, the company boasted $423 million of free cash flow, allowing it to pay a 10.8 cent interim dividend in September.

Looking further back, the stock paid investors a 12.2 cent final dividend for 2021 in April. In-between those two offerings, it handed shareholders two special dividends, worth a combined total of 16.6 cents.

And with the company planning to pay out between 60% and 100% of free cash flow in the form of dividends in the future, one expert is bullish.

Tribeca Investment Partners portfolio manager Todd Warren has tipped Coronado Global Resources shares as a buy, saying courtesy of Livewire:

[It has] a very strong balance sheet, net cash, generating huge amounts of free cash.

They’re exposed to both thermal coal and met coal, which gives them a little bit of a hedge against one market or the other. They’re also hedged in terms of their geographic location, and I think actually where we might see some near-term upside … is their met coal exposure out of the US, which is priced on long-term contracts.

On that note, the fundie has tipped the company’s dividend yield to actually increase in the near future. Warren said:

[Higher yields are] a function of the huge free cash they’re going to continue to generate.

What do other experts tip for Coronado Global Resources shares?

But not all are so bullish on the ASX 200 shares’ future.

Goldman Sachs, for instance, has a buy rating on Coronado Global Resources’ shares, but a price target of just $1.85. That means the broker isn’t expecting the stock to gain much from here.

Though, it does tip the company’s free cash flow to surpass US$700 million in the December half amid continuing risks surrounding Russian coal. That could spell good news for future dividends.

Meanwhile, Monash Investors co-founder and director Simon Shields believes the stock is a hold, telling Livewire “I just can’t get the same sort of handle on [the coal price] as I can for the oil price.”

The post Buy this ASX 200 share with a massive dividend yield and ‘huge amounts of free cash’: experts appeared first on The Motley Fool Australia.

.

More reading

• Government says Aussie coal exports will hit record levels. Here’s which ASX 200 shares are cashing in
• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today
• ‘Willingness to pay a premium’: ASX coal shares boom again on Wednesday
• September living up to its ‘worst month of the year’ reputation as ASX 200 finally cracks

Motley Fool contributor Brooke Cooper 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 Goldman Sachs. 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.

from The Motley Fool Australia https://ift.tt/8XE0NUn

The Commonwealth Bank of Australia (ASX: CBA) share price is off to a strong start in October.

The big four bank share slipped 0.1% on Monday. But its shares closed up 4.6% yesterday and are up 2.64% in afternoon trading today.

That’s a fair bit more than the 1.51% gain posted by the S&P/ASX 200 Index (ASX: XJO) at this same time.

Following the past two days’ gains, the CBA share price stands at $97.29. But will it regain its $100 crown in October?

Can the CBA share price regain its $100 crown?

CommBank first breached the psychologically significant $100 mark in May last year, going on to top $110 per share in November.

But the CBA share price hasn’t been immune to the impacts of rising interest rates since that high water mark.

While higher rates do enable the bank to increase its net interest margins (NIMs), there are also potential headwinds from lower demand for new mortgage lending and higher levels of bad debts among its customers.

It’s also worth noting that the bank trades on a significant premium to the other big listed lenders.

CBA trades at a price-to-earnings (PE) ratio of 18.7 times, compared to a PE ratio of 11.2 times for rival Australia and New Zealand Banking Group Ltd (ASX: ANZ).

So, can the CBA share price regain its $100 mark this month, a level it last saw on 7 June this year?

With the past few days’ bullish run in mind, it’s certainly possible.

But Evans & Partners doesn’t expect that to hold.

The broker raised its rating for CBA to neutral with a price target of $85.

The post Can the CBA share price regain its $100 crown in October? appeared first on The Motley Fool Australia.

.

More reading

• Here’s how ASX 200 bank shares fared in the shocker month of September
• Why were so many CBA shareholders cashing out in September?
• ASX 200 dividend shares suffer September sell-off
• Looking to buy CBA shares? Here’s what you need to know
• CBA share price falls despite APRA update

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.

from The Motley Fool Australia https://ift.tt/dWTRIYK

The A2 Milk Company Ltd (ASX: A2M) share price is having a disappointing day.

In afternoon trade, the infant formula company’s shares are down 1.5% to $5.48. This compares unfavourably to the ASX 200 index and its sizeable gain of 1.5%.

Investors may be surprised with the performance of the A2 Milk share price on Wednesday. That’s because today is a big day for shareholders.

Why is today a big day?

When A2 Milk released its full year results in August, the company announced that it was finally returning some of its hefty cash balance to shareholders via an on-market share buyback.

The company is planning to return NZ$150 million to shareholders through the purchase of up to 37,180,621 shares over the next 12 months at the prevailing market price. This represents 4.99% of its total shares outstanding.

Last week, A2 Milk revealed that today is the day that the on-market share buyback will commence.

However, rather than sending the A2 Milk share price higher today, the company’s shares are underperforming the market and dropping into the red.

What’s going on with the A2 Milk share price?

Just because a share buyback is underway, doesn’t necessarily mean that a company will be actively buying shares on a particular day.

It could be that the company and its advisers are waiting for a better entry point or are buying small parcels of shares on a regular basis in order to not artificially inflate the A2 Milk share price. After all, if the price gets too high, it won’t be able to buy as many shares with its funds.

It is also worth noting that the company is not obliged to buy shares and can “suspend without notice or vary or terminate the buyback programme at any time.”

Investors will just have to sit tight and wait for updates on the buyback in due course to see how things progress.

The post A2 Milk share price drops despite buyback kicking off appeared first on The Motley Fool Australia.

.

More reading

• Macquarie reveals ASX 200 shares ‘more likely to outperform in a bear market rally’
• Here’s why the A2 Milk share price is storming higher today
• A2 Milk share price drops despite solid start to FY23
• A2 Milk share price lifts as buyback kicks off
• The A2 Milk share price has smashed the ASX 200 over the past month. What’s going on?

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 A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/KFA0GMs

The Novonix Ltd (ASX: NVX) share price is bucking its lengthy losing streak.

Finally.

Shares in the battery technology company are up 3.9% to $1.97 at the time of writing, having earlier posted gains of more than 5%.

Yesterday, the Novonix share price closed up 9.2% after hitting new 52-week lows on Monday.

Here’s what ASX investors are mulling over.

What are ASX investors considering?

The Novonix share price has come under major selling pressure in 2022, down a painful 82% despite the past two days of gains.

Investors sold off the company as both domestic and global interest rates rapidly took off from their historic lows at the beginning of 2022 to combat fast-rising inflation.

Higher interest rates are bad news for equities in general, but particularly onerous to loss-making companies reliant on debt to fund their future growth and profitability plans. As rates run higher, the cost of those future earnings becomes dearer.

And the Novonix share price took a hit after the company reported a big leap in its net loss for FY22. That came in at $71 million compared to a net loss of $18 million in FY21.

Novonix ended the financial year with a cash balance of $207 million. But management said that won’t be enough to fund its expansion plans, saying those plans will “involve significant capital expenditure, and additional funding beyond the existing cash balance at 30 June 2022 will be required”.

Novonix shares look to be rebounding over the past two days following a dovish shift from the Reserve Bank of Australia (RBA). The RBA opted to raise rates by a modest 0.25% rather than the 0.50% hike markets had widely priced in. Good news, for loss-making stocks.

Novonix share price snapshot

The 82% loss posted by the Novonix share price so far in 2022 offers a dramatic contrast to the price movement in 2021.

2021, of course, was a year when the official cash rate in Australia stood at the historic low of 0.10%. A year when the RBA also told ASX investors they could expect rates to remain at rock bottom levels, likely through 2024.

With record low funding costs in mind, the Novonix share price rocketed an eye-popping 904% from the closing bell on 31 December 2020 through to 2 December 2021, when it hit $12.15 per share.

The post Novonix share price shakes off losing streak to post second day of gains appeared first on The Motley Fool Australia.

.

More reading

• The Novonix share price sank to another 52-week low today. What’s been going so wrong?
• Here’s how ASX tech shares fared in September
• Novonix share price dips lower amid interest rate hike fears
• Novonix share price sinks to new 52-week low on Wednesday
• Novonix share price dives again, down 19% in two weeks

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.

from The Motley Fool Australia https://ift.tt/AP3t0YL

Top broker Macquarie says a “bear market rally” may have already started following yesterday’s “dovish” interest rate increase along with weak US ISM Manufacturing data.

The S&P/ASX 200 (ASX: XJO) is up 1.56% at the time of writing after closing 3.75% higher yesterday.

That was the index’s best performance in more than two years. Translation: The market loved the Reserve Bank of Australia’s decision to raise rates by only 0.25% — not the 0.5% that the market expected.

Top broker names ASX 200 shares poised to outperform

In The Australian today, Macquarie’s Australian equity strategist Matthew Brooks said a number of top 100 shares would likely outperform in a bear market rally.

The shares include ASX gold mining stocks and Australian real estate investment trusts (REITs).

The broker says these ASX 200 shares are the furthest below their long-term trend and are rated outperform.

• Newcrest Mining Ltd (ASX: NCM) — share price down 26% year to date
• Evolution Mining Ltd (ASX: EVN) — share price down 48% year to date
• Goodman Group (ASX: GMG) — share price down 35% year to date
• Dexus Property Group (ASX: DXS) — share price down 28% year to date
• GPT Group (ASX: GPT) — share price down 26% year to date
• James Hardie Industries plc (ASX: JHX) — share price down 39% year to date
• Ramsay Health Care Limited (ASX: RHC) — share price down 20% year to date
• ASX Ltd (ASX: ASX) — share price down 21% year to date
• ARB Corporation Limited (ASX: ARB) — share price down 46% year to date
• Reliance Worldwide Corporation Ltd (ASX: RWC) — share price down 44% year to date.

Brooks said:

We think these stocks are more likely to outperform in a bear market rally.

In terms of stocks that may lag, A2 Milk Company Ltd (ASX: A2M) is rated underperform, while Woodside Energy Group Ltd (ASX: WDS), Medibank Private Ltd (ASX: MPL), Brambles Limited (ASX: BXB), WiseTech Global Ltd (ASX: WTC) and Altium Limited (ASX: ALU) are rated neutral.

The post Macquarie reveals ASX 200 shares ‘more likely to outperform in a bear market rally’ appeared first on The Motley Fool Australia.

.

More reading

• Buy these ASX 200 shares with big fully franked yields: experts
• 5 things to watch on the ASX 200 on Wednesday
• Why is the Woodside share price beating the ASX 200 today? 
• Why Allkem, Evolution, Paradigm, and Sayona Mining shares are zooming higher
• Was the Woodside share price a safe haven in September?

Motley Fool contributor Bronwyn Allen has positions in James Hardie Industries plc, Macquarie Group Limited, and Woodside Petroleum Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Altium, Reliance Worldwide Corporation Limited, and WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. The Motley Fool Australia has recommended A2 Milk, ARB Corporation Limited, Macquarie Group Limited, Ramsay Health Care Limited, and Reliance Worldwide Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/IiroeLb

It has been a great day for the Zip Co Ltd (ASX: ZIP) share price.

In afternoon trade, the buy now pay later (BNPL) provider’s shares are up 7% to 75 cents.

This follows a rebound in the tech sector, which has seen the S&P/ASX All Technology Index rise almost 4% today.

However, despite today’s strong gain, there’s no getting away from the fact that the Zip share price is having a tough year.

For example, since the start of 2022, the BNPL provider’s shares are down over 82%.

What’s weighing on the Zip share price?

Tech valuations, the market’s aversion to loss-makers, and doubts over Zip’s pathway to profitability have been weighing on its shares this year.

Also potentially putting a bit of pressure on the Zip share price recently has been concerns over rising funding costs.

For example, as the AFR reports, Zip is currently looking to raise $300 million from debt markets to fund its receivables via the Zip Master Trust Series 2022-1.

A year ago, when Zip raised $650 million from the Zip Master Trust Series 2021-2, it was paying 0.9% to 6.3% margins. However, this time around, it is having to pay 1.95% to 12.5% margins for the $300 million.

What is unclear, though, is how much of this increase is driven by rising rates and how much reflects lending risks in the current economic environment.

The response

S&P Global has been looking at the offering and spoke reasonably positively about it. The ratings agency notes that some of the strengths of this offering are:

The relatively small average receivable size, which reduces credit exposure per borrower. That the receivables are generated through a diversified and large number of retailers and the portfolio is not overly exposed to any merchant, with the top exposure representing less than 2.3% of total transaction volume.

That the presence of a series-specific liquidity facility, in our view, mitigates potential disruption risks to timely interest payments on the rated notes during a servicer transition period following a servicer default.

However, there are some weaknesses that the agency has observed, which could be what is raising the cost of this funding. This includes:

That with an initial revolving period, the credit characteristics of the portfolio could change, potentially undermining the portfolio’s overall credit quality. This is partly mitigated by documented eligibility criteria and a specified limit on the addition of new receivables over 12 consecutive months, which limits the potential shift in the composition of the portfolio.

With the cash rate continuing to rise, it will be interesting to see whether funding costs go from here and what impact this ultimately has on margins and its profitability targets.

The post Raising funds outside the ASX comes at a cost for Zip appeared first on The Motley Fool Australia.

.

More reading

• The Zip share price had another horror month. How much did it fall?
• Here are the 10 most shorted ASX shares
• Why is the Zip share price trailing the ASX 300 on Friday?
• Why did the Zip share price jump 4% today?
• How does Zip plan to become a cash flow positive ASX company?

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 ZIPCOLTD FPO. 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.

from The Motley Fool Australia https://ift.tt/vnLsct4

The S&P/ASX 200 (ASX: XJO) is up 1.58% today as the benchmark index enjoys a second day in the sun.

The ASX 200 was in a happy place yesterday, delivering its best performance in more than two years. The ASX 200 closed 3.75% higher at 6,699.3 points.

This followed the Reserve Bank of Australia’s decision to raise interest rates by 0.25% — not the 0.5% that the market and many economists anticipated.

So, what does this mean for ASX 200 shares as we move forward into the second quarter of FY23?

What will ASX 200 shares do in Q2?

So, to recap, Q1 was kinda dismal for the ASX 200. Over the first three months of FY23, the index fell 1%.

Investors were taken on a rollercoaster through reporting season. Good news from individual companies was dampened by broader worries about inflation, interest rates, and a potential United States recession.

Given the market elation over yesterday’s lower rate rise, one must assume that RBA interest rate decisions are going to directly determine how the ASX 200 performs in Q2 FY23.

Over to the experts to explain what might happen.

Lower rate rise ‘positive for the markets’

Shaw & Partners senior investment adviser James Nicolaou says the RBA’s decision might signal that the other rate increases this year are “starting to have the desired effect”.

And that’s “positive for the markets and economy,” he says in an article in The Australian today.

In the same article, Betashares chief economist David Bassanese said:

Unlike the US Federal Reserve, the RBA is thinking twice about pushing the economy into a recession it might not need to have.

In a separate article also published by The Australian, top broker Macquarie said a “bear market rally” may have already started following the “dovish” RBA increase and weak US ISM Manufacturing data.

Why did the RBA choose a lower rate rise?

There are going to be lots of opinions in the media today about why the RBA chose to go 0.25% this time around. Why don’t we go straight to the horse’s mouth for a clearer insight?

In a statement yesterday, RBA Governor Philip Lowe said:

The cash rate has been increased substantially in a short period of time. Reflecting this, the Board decided to increase the cash rate by 25 basis points this month as it assesses the outlook for inflation and economic growth in Australia.

So, sounds like the board is happy to slow things down for a bit after a series of more aggressive hikes. And that’s going to be good for ASX 200 shares if yesterday’s reaction is anything to go by.

Are this year’s rate hikes working to curb inflation?

So, let’s review. Interest rates began to rise in May this year with an initial 0.25% bump. It was the first rate rise since November 2010. Yeah. Major.

The RBA then bumped up rates by 0.5% every month until yesterday’s 0.25% decision. So, the official cash rate is up 2.5% in six months.

The banks are largely passing on every hike in full to borrowers. So, on the average Australian mortgage of $600,000, borrowers are now paying more than $1,250 extra per month in interest. Eek.

You’d think that would be more than enough to disrupt most household budgets and cause a change in spending.

But we don’t know the impact yet, as inflation continues to rise for now. There’s a lag effect with these things.

Time will tell.

The post Is the outlook for ASX 200 shares in Q2 brighter since the RBA’s interest rate decision? appeared first on The Motley Fool Australia.

.

More reading

• Flight Centre shares: Buy, hold, or fold?
• How did the Pilbara Minerals share price surge 25% during the ‘worst month of the year’?
• RBA increases rates again… but by less than expected. Scott Phillips on Nine’s Late News
• ‘Significance cannot be understated’: Why this ASX lithium share is surging on Wednesday
• Why Bitcoin and Ethereum are rising today

Motley Fool contributor Bronwyn Allen has positions in Macquarie Group Limited. 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 Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/6CmG7u0