Category: Stock Market

The S&P/ASX 200 Index (ASX: XJO) is back in green territory so far today, with the ASX 200 presently up a robust 0.35%.

But the Block Inc (ASX: SQ2) share price is doing even better. Block shares are currently enjoying a healthy 4.14% bump to $88.29 each so far this Thursday.

This move must come with much relief for Block investors, who have had to watch the company slide a depressing 30% over the past month (even after the 8%-plus gains of the past week).

But Block (formerly known as Square) is still down by around half its value over 2022 thus far. So it’s certainly been a trying time for the company’s shareholders. Many of whom would still hold Block shares after the company took over the buy now, pay later (BNPL) pioneer Afterpay earlier this year.

Although Block is listed on the ASX, it is actually a US-based company, whose primary listing is Block Inc (NYSE: SQ) on the New York Stock Exchange.

SQ and SQ2 shares are essentially congruent in value though (factoring in exchange rates), so the company’s US stock has had a similar journey to Block’s ASX shares over this year.

Block shares have got a brand new buyer

We’ve recently got some news that a large buyer is swooping on Block following its steep falls over 2022.

As covered by our Fool colleagues over in the US, we’ve just found out that ARK Invest’s Cathie Wood has bought another US$5 million of Block shares.

Cathie Wood runs one of the most popular exchange-traded funds (ETFs) on the US markets – the ARK Innovation ETF (NYSE: ARKK).

This ARKK ETF has a reputation as the preeminent growth-based ETF on the US markets. It typically invests in companies like Tesla Inc (NASDAQ: TSLA), Shopify Inc (NYSE: SHOP) and Zoom Video Communications Inc (NASDAQ: ZM). 

ARKK has taken a fairly big hit over 2022, but ARKK was a top performer over 2020 and 2021.

According to our colleagues across the Pacific, ARK bought nearly 355,000 Block shares over May. It stopped buying when the company topped US$80 a share. But ARK has resumed buying this week, with another 82,000 shares (US$5 million worth) acquired on Tuesday alone.

Block’s US stock has been trading around US$60 for most of this week. So clearly Cathie Wood is seeing some value in the Block share price right now.

But only time will tell if Block’s current price proves to be a low point for the company going forward.

At the current Block share price, this US tech company has a market capitalisation of US$35.21 billion.

The post Block shares are back on the buy list for this big-name investor appeared first on The Motley Fool Australia.

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More reading

• These are the 10 most shorted ASX shares
• These were the worst performing ASX 200 shares last week
• Why Block, Fortescue, GUD, and Humm shares are sinking today
• ASX 200 midday update: GUD crashes, tech shares tumble
• Block share price sinks again and is now down over 50% since its ASX listing

Motley Fool contributor Sebastian Bowen has positions in Block, Inc., Tesla, and Zoom Video Communications. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block, Inc., Shopify, Tesla, and Zoom Video Communications. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify. The Motley Fool Australia has positions in and has recommended Block, Inc. The Motley Fool Australia has recommended Zoom Video Communications. 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 Mesoblast Limited (ASX: MSB) share price has started the day well and is now trading around 4% higher at 68.5 cents apiece.

Despite the gain today, Mesoblast shares have struggled since April. They are down around 40% since that time, in continuation of a longer-term downtrend.

Mesoblast is also down 51% this year to date, amid a heavy sell-off in ASX tech shares. In the last 2 weeks, a plunge in the broader market has pulled the share lower.

What’s up with the Mesoblast share price?

Investors have been selling the Mesoblast share price down on no news. The company did release its financial and operational highlights for the last quarter on 1 June, however, the market was unfazed.

In fact, shares have been trending south for over 1 year now, having fallen hard from a sharp peak of $4.60 in December 2020.

Since then, shares have rolled lower and now trade at both 2-year and 52-week lows.

With the trend in place, there’s been no support from the market, not in 2022 anyway. The S&P/ASX All Technology Index (ASX: XJO) is also at yearly lows having sunk 38% this year to date.

Furthermore, Mesoblast has seen proceedings started against it in a Federal Court of Australia back in May.

According to TMF at the time, the claimant – someone who bought shares between 2018-2020 – alleges Mesoblast “engaged in unlawful conduct that misled the market about remestemcel-L”.

“Mesoblast has reportedly faced multiple class actions in the US on similar allegations,” TMF added.

Nevertheless, the Mesoblast share price has tumbled more than 69% into the red over the last 12 months, as seen below.

The post Why has the Mesoblast share price crashed 40% since April? appeared first on The Motley Fool Australia.

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More reading

• Mesoblast share price spikes amid ‘substantial reduction in operational spend’

Motley Fool contributor Zach Bristow 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 Fortescue Metals Group Limited (ASX: FMG) share price is sliding today, down 3.8% to $17 per share.

And it’s not just Fortescue shares under pressure.

The BHP Group Ltd (ASX: BHP) share price is down 2.7% and rival S&P/ASX 200 Index (ASX: XJO) mining share Rio Tinto Limited (ASX: RIO) has dropped 2.9% today.

So, what’s going on?

All eyes on China

Iron ore prices have slipped again, down 5.6% overnight to US$109 a tonne.

Iron ore topped US$144 earlier this month as investors digested news that China was easing its pandemic lockdown measures and the government was ramping up stimulus measures.

That saw the Fortescue share price at $21.63 on 8 June. Shares are down 21% since then.

China is the world’s largest importer of iron ore, a core steel making ingredient, and it’s the chief destination for Aussie exports. But prices for iron ore and the companies that dig the metal from the earth have come under pressure amid a falling outlook for demand from the Middle Kingdom.

According to Daniel Hynes, senior commodity strategist at Australia and New Zealand Banking Group Ltd (ASX: ANZ), courtesy of The Australian Financial Review, “The promise of more economic support in China failed to boost sentiment. Expectations of a rebound in the real estate sector have slowly fallen as renewed outbreaks of COVID-19 lead to further lockdowns.”

Lachlan Shaw, co-head of mining research at UBS added, “There was a lot of expectation built into the iron ore price about more stimulus and construction in China in the second half, so to have signals coming through that counter that is testing the market’s patience.”

As for the growth outlook for the latter half of 2022, Caroline Bain at Capital Economics said (quoted by the AFR):

We expect China’s output to grow in y/y terms in the second half of the year given the much lower base. However, we still only forecast growth of around 1% this year given the government’s ongoing efforts to reduce the energy intensity of activity and carbon emissions. Demand, particularly from the residential property sector, is also likely to be subdued.

Fortescue share price snapshot

The Fortescue share price hasn’t escaped the wider selling pressure in 2022, down 14%. That compares to a year-to-date loss of 14% posted by the ASX 200.

Longer-term, Fortescue shares have widely outperformed, up 265% in five years.

The post Why is the Fortescue share price sinking 4% on Thursday? appeared first on The Motley Fool Australia.

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More reading

• ASX 200 midday update: Pilbara Minerals’ lithium price update, BHP tumbles
• Can the Fortescue share price hold up if the iron ore price falls?
• 5 things to watch on the ASX 200 on Thursday
• Could China ‘steel’ the show for the iron ore price?
• ‘I don’t know of a better industry to be pivoting towards’: Twiggy talks up hydrogen play amid soaring fuel costs

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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Zip Co Ltd (ASX: ZIP) shares are slipping in morning trade, down 3.2% to 45 cents per share.

The ASX buy now, pay later (BNPL) share has been under tremendous selling pressure over the past year amid investor jitters over rising interest rates and rising debts.

How will Zip shares fare amid rising interest rates and debts?

As at December 2021, Zip’s total outstanding borrowings stood at $2.4 billion, as reported by The Australian. Some $400 million of debt will need to be refinanced in approximately two years.

With Zip shares remaining under pressure, the company responded to investor concerns over inflation, interest rates and rising debts, reporting that its underlying business remained strong.

It said it had “a solid pipeline of enterprise merchants” coming onto its platform. These include household names like Qantas Airways Ltd (ASX: QAN), eBay and Best Buy.

Addressing the impact of rising interest rates, Zip reported it was “well placed to respond to and offset” those effects. It listed a series of initiatives already in progress to cope with a higher rate environment. Those include consumer fee increases, merchant repricing, and increased customer repayment velocity.

The United States market was reported to be particularly resilient to any impact from rising interest rates. Zip estimated that any 0.25% rate increases would impact its cost of fund by 0.02% per transaction.

With the company still eyeing future growth, it reported its acquisition of Sezzle Inc (ASX: SZL) is on track. Shareholders will vote on the acquisition later in 2022.

What did management say?

Commenting on Zip shares in the current market conditions, CEO Larry Diamond said:

In an environment where wage growth is falling behind heightened inflationary pressures, affordability becomes an even more important priority for consumers as they budget each month.

We believe our business model will stand up exceptionally well in such an environment as we continue to provide significant value and benefit to our customers and importantly our merchant partners seeking to drive continued growth.

Zip advised shareholders it had AU$401.9 million undrawn and available in Australia, and US$168.1 million available in the US, with $303 million available in cash and liquidity as at 31 March.

The company also has $24 million from its April share purchase plan (SPP). It expects to have sufficient capital to see it through to cash flow breakeven in the 2024 financial year.

How have Zip shares been tracking?

Zip shares have been hammered this year, down 90% since the opening bell on 4 January. That compares to a year-to-date loss of 15% posted by the All Ordinaries Index (ASX: XAO.

The post Own Zip shares? Here’s how much debt the company has and what this could mean amid rising interest rates appeared first on The Motley Fool Australia.

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More reading

• Zip share price dives 11%, closing below 50c for first time in 6 years
• Why Blackmores, Lake Resources, St Barbara, and Zip shares are dropping
• ASX 200 midday update: St Barbara and Zip drop to multi-year lows
• The Zip share price is down 90% in 2022. Why I won’t be buying
• Zip share price falling again as market experts argue for UK and US exit

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 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.

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Experienced ASX investors love a good market dip. Those who are confident and have been through several market cycles know it’s best to buy when others are fearful, and sell when others are greedy, to borrow a nugget of wisdom from the world’s most successful investor, Warren Buffett.

So, what are the best ‘buy the dip‘ opportunities in front of us today?

In this article, we’ll look at the ASX 200 bank shares. Is there money to be made by investing now for price gains during the recovery — whenever we get to it?

Why is there a dip in ASX 200 bank shares anyway?

So, there’s been a pretty major sell-off in ASX bank shares in recent times. The share prices of the big four are all down in 2022 — like the rest of the market — but the drop really accelerated in June.

The reason? A 50-basis point interest rate hike announced by the Reserve Bank of Australia on 7 June.

The last time the RBA made a change this large was May 2012. A decade ago. That’s how rare it is.

The market expected an increase but 0.5% was a bit of a surprise. People were already worried about how bad inflation was going to get, and how high interest rates would have to go to arrest it.

And if they go too high, could that bring on a recession?

In response to the news, the S&P/ASX 200 Index (ASX: XJO) dropped by 1.2% over 7 June and 8 June.

The S&P/ASX 200 Financials (ASX: XFJ) went harder, losing 5.1% over the same two days. The index tumbled 14.8% in total over the next 10 days to 17 June, when it finally found support.

Don’t rising interest rates mean the banks earn more money?

Sure, rising interest rates mean the banks can charge millions of highly-leveraged Aussie homeowners more interest on their home loans. That’s a lot of extra income too, given Australia has the second-highest household debt in the world behind Switzerland. So, that’s the good part about rising rates for ASX 200 bank shares.

The downside is that when inflation and interest rates are high or rising, people get cautious. They put off upsizing or downsizing and the banks usually see a decline in new mortgage business. Some people have trouble paying their mortgages and become a ‘bad debt’ on their bank’s balance sheet.

Plus, rising global rates mean Aussie banks have to pay more interest on their own new borrowings from overseas wholesale banks to fund new mortgages here. As a result, net interest margins (NIMs) – the difference between the cost of borrowing and the income from loan interest — can decline.

So, they’re the elements worrying ASX bank shareholders. They’re not just concerned about share prices either. They’re also wondering how all these headwinds are going to impact bank dividends.

How big is the dip?

The big four ASX bank shares have lost between 11% and 15% over the past month.

Existing shareholders might see this as an excellent dollar-cost averaging opportunity. But others not already invested in the banks are probably wondering whether buying in now is smart or not.

Let’s go to the experts.

According to reporting in the Australian Financial Review (AFR), top broker Morgan Stanley has recently reduced ASX bank shareholdings in its model portfolio from overweight to underweight.

The broker has cut its price targets on the major ASX bank shares by 15% on average.

In order of preference, Morgan Stanley likes Westpac Banking Corp (ASX: WBC) (overweight), Australia and New Zealand Banking Group Ltd (ASX: ANZ) (equal weight), National Australia Bank Ltd (ASX: NAB) (equal weight), and Commonwealth Bank of Australia (ASX: CBA) (underweight).

What’s worrying the brokers about ASX bank shares?

Fund manager T. Rowe Price worries that the earnings of ASX bank shares could “weaken sharply in the next six to 12 months as slowing growth sparks an increase in non-performing loans”.

But managing director of Plato Investment Management Don Hamson says the market’s worries that higher interest rates will increase loss provisions are “way overdone”. He also says speculation about a potential recession is “way too premature”.

UBS points out that the big banks have $15 billion in provisions between them. John Storey, head of Australian bank research at UBS, says: “There would need to be a substantial blow-up in credit provisions to derail the Australian banks earnings story.”

Brendan Sproules, head of Australian bank research at Citi, agrees. He says: “We find that the current underwriting standards explicitly build a significant level of financial buffer, even for the most leveraged borrowers.”

Citi reckons the recent sell-off is a buying opportunity. Macquarie agrees, calling it a “tactical” buying opportunity (which sounds cooler, right?)

In another AFR story, the chief investment officer at Clime Investment Management, Will Riggall, says his team “will be selectively increasing our position in bank shares through this period of volatility“.

“We see the high and sustainable dividend outlook as a key attraction in what is likely to be a lower-return environment.

We believe house prices are set to decline. However, given the amount of savings held by consumers, we are unlikely to see the sharp increase in defaults that would be needed to offset the positive impact that higher variable rates have on bank earnings.

We have a preference to own stocks with exposure to corporate and government spending, with the Australian consumer likely to remain under pressure.

NAB has been a stellar performer for the portfolio this year, largely driven by the exceptional turnaround under new CEO Ross McEwan.

So, what now?

If you’re keen to buy this ASX bank share dip, better get in quick.

The bottom of the dip looks to have been 17 June.

The S&P/ASX 200 Financials has had a 4.3% rebound since then.

The post Should you ‘buy the dip’ in ASX 200 bank shares? appeared first on The Motley Fool Australia.

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More reading

• ASX 200 midday update: Pilbara Minerals’ lithium price update, BHP tumbles
• ANZ share price rises as MYOB acquisition rumours swirl
• 5 things to watch on the ASX 200 on Thursday
• What’s the outlook for ASX 200 bank dividends?
• Is the NAB share price about to hit the comeback trail?

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Bronwyn Allen has positions in Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, Macquarie Group Limited, and Westpac Banking Corporation. 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 and Westpac Banking Corporation. 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 Ramelius Resources Limited (ASX: RMS) share price is trading 8% lower today at $1 apiece.

Investors are selling the $945 million company by market cap following a company announcement on its gold production estimate for FY22.

What did Ramelius announce?

The company advised that gold production is expected to fall “marginally short” of the current guidance range.

It noted that:

[M]ore persistent rain than forecast, especially recently, on some of the haulage routes to both the Mt Magnet and Edna May operations, ongoing staff shortages due to COVID/influenza and a lower than forecast head grade from Tampia, it is expected that gold production for FY22 will fall marginally short of the current guidance range of 260,000 – 265,000 oz.

This is despite the best efforts of the Ramelius and contractor teams in a challenging operating environment across the Western Australian resources industry.

Ramelius downgraded FY22 production guidance to 255,000–260,000 ounces as a result.

The company also noted it’s “too early” to provide definitive guidance on all-in-sustaining costs (AISC).

Still, an AISC of $1,475–$1,525/ounce is a reasonable expectation, it noted.

Actual results for FY22, in addition to FY23 guidance, will be provided in its quarterly report, set for release in July.

Turning to the trading session, investors weren’t pleased with the news and have sold en masse today. Already they’ve pushed trading volume towards the 4-week average of 3.9 million shares.

The loss also extends a difficult period for Ramelius on the chart. It is down 25% in the last month alone.

Meanwhile, in the last 12 months, the Ramelius share price has cratered more than 41% and 36% this year to date.

The post Why is the Ramelius share price getting rained on today? appeared first on The Motley Fool Australia.

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More reading

• These were the best performing ASX 200 shares last week

Motley Fool contributor Zach Bristow 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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At lunch on Thursday, the S&P/ASX 200 Index (ASX: XJO) is on course to record a decent gain. The benchmark index is currently up 0.4% to 6,534.2 points.

Here’s what is happening on the ASX 200 today:

Pilbara Minerals’ lithium price update

The Pilbara Minerals Ltd (ASX: PLS) share price is defying weakness in the lithium industry and charging higher. This has been driven by the release of an update on its BMX auction. According to the release, the company’s next auction has concluded before it even started after Pilbara Minerals received and accepted a pre-auction bid that equates to approximately US$7,000 per dry metric tonne (dmt). This is up from US$6,586 per dmt a month earlier.

ASX 200 mining giants tumble

It has been a difficult day of trade for mining giants BHP Group Ltd (ASX: BHP), Fortescue Metals Group Limited (ASX: FMG), and Rio Tinto Limited (ASX: RIO). They have taken a tumble this morning after the iron ore price continued its decline. According to Metal Bulletin, the benchmark iron ore price fell a further 5.5% to US$109.40 a tonne.

ANZ shares lift on MYOB rumours

The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price is outperforming on Thursday. This appears to have been driven by rumours that the banking giant is close to acquiring accounting software company MYOB. The bank is understood to be interested in building a one-stop platform for small businesses.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Thursday has been the IPH Ltd (ASX: IPH) share price with a 4.5% gain despite there being no news out of the IP services provider. Going the other way, the Lake Resources N.L. (ASX: LKE) share price is the worst performer with a 17% decline. The exit of its CEO and lithium demand concerns have been weighing on this new entrant to the ASX 200.

The post ASX 200 midday update: Pilbara Minerals’ lithium price update, BHP tumbles appeared first on The Motley Fool Australia.

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More reading

• Could this be weighing down the Rio Tinto share price today?
• ANZ share price rises as MYOB acquisition rumours swirl
• Pilbara Minerals share price storms higher amid ‘unprecedented demand’ for lithium
• Can the Fortescue share price hold up if the iron ore price falls?
• Why we just bought these 3 ASX shares: fund

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 recommended IPH Ltd. The Motley Fool Australia has recommended IPH Ltd. 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 AGL Energy Limited (ASX: AGL) share price is slipping this morning amid reassurances regarding the company’s now-cloudy future.

A planned demerger that would have seen AGL split into energy retailer AGL Australia and energy producer Accel Energy was binned last week on the expectation it wouldn’t receive adequate shareholder support.

Today, AGL chair Peter Botten reassured shareholders of its path forward. That path will include a promised review into the company’s strategic direction and some notable board and management changes.

At the time of writing, the AGL share price is $8.14, 1.09% lower than its previous close.

For context, the S&P/ASX 200 Index (ASX: XJO) is higher today, having gained 0.35%. The company’s home sector ­– the S&P/ASX 200 Utilities Index (ASX: XUJ) – is also up 0.59%. Though, the S&P/ASX 200 Energy Index (ASX: XEJ) has slumped 2.2%.

Let’s take a closer look at the latest news on the embattled energy giant.

Here’s the latest on AGL’s path forward

The AGL share price is in the red on Thursday. It comes as the company’s chair reaches out to shareholders to inform them of the company’s plans for the future.

AGL committed to a review of its strategic direction when it announced the withdrawal of its planned demerger.

The review aims to develop a strategy to create an integrated AGL. Such an AGL will be able to build shareholder value and take on a key role in helping Australia meet its energy requirements in the energy transition, said Botten.

AGL has the opportunity to play our part in helping Australia achieve net zero and will do so by leveraging our extensive energy and innovation expertise.

Botten said in a letter to shareholders today

The review has four major targets. It will:

• Explore plans made for both AGL Australia and Accel Energy, focusing on which initiatives should be retained, reviewed, or stopped
  
• Look at pathways AGL could take towards decarbonisation
  
• Analyse the energy asset portfolio required to speed up decarbonisation, as well as the company’s role in providing needed energy and capacity
• Assess and review options for AGL’s capital structure and funding providers

The company also updated investors on upcoming changes to its board and management.

Both Botten and AGL CEO and managing director Graeme Hunt agreed to step down following the demerger’s failure.

Today, Botten said the process to find a new chair is well advanced, having built on work undertaken as part of the demerger process.

The company has also started a global search for a new managing director and CEO.

We are committed to ensuring that these processes are both thorough and timely to ensure stability of leadership to take this company forward.

Botten’s letter reads

AGL will provide an update on the review when it releases its financial year 2022 results. The initial outcomes of the review are expected to be presented in September.

AGL share price snapshot

Despite plenty of drama, the AGL share price has been outperforming in 2022. It has gained 29% year to date.

Though, it’s still nearly 11% lower than it was this time last year. It’s also 67% lower than it was five years ago.

The post What’s with the AGL share price today? appeared first on The Motley Fool Australia.

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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 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 Rio Tinto Limited (ASX: RIO) share price is hurting today and is currently down 2.63%.

As one of the largest mining companies in the world, its decline represents a large fall in dollar terms and also has a sizeable impact on the S&P/ASX 200 Index (ASX: XJO).

The ASX 200 is currently up by 0.49%, so Rio Tinto is underperforming noticeably.

Let’s look at a couple of the latest developments.

Iron ore price decline

As a commodity business, Rio Tinto’s revenue, cash flow, net profit after tax (NPAT) and dividends are heavily influenced by changes in resource prices. Iron ore is a particularly important segment because it generates a large amount of Rio Tinto’s annual earnings.

Commsec noted that, overnight, the iron ore price fell by another 1.5%.

The iron ore price has fallen by double digits over the last two weeks. The Rio Tinto share price has dropped by around 15% during that time.

Recession risks increase

According to reporting by The Australian, CBA director of mining and energy commodities research Vivek Dhar noted that US Federal Reserve chair Jerome Powell said it would be “very challenging” to create a soft landing for the US economy and that a recession is a possibility, leading to weakening demand for commodities.

This problem of a potential looming recession is one that many economies face, according to Dhar.

‘Emerging’ economies could be in an even tougher position because of the impacts of COVID-19, Dhar said:

A declining price profile across most mining and energy commodities is justified in light of a weakening demand outlook. A scenario of rising prices from here is likely contingent on China relaxing its COVID-zero policy.

In fact, commodity markets are no longer looking at the promise of significant infrastructure investment in China this year as optimistically as they did just a couple of months ago.

That’s because current conditions in China are clearly pointing to risks of surpluses in commodity markets, particularly steel.

We think the likelihood that China will relax its COVID-zero policy will increase after the 20^th National Party Congress in October.

Rio Tinto share price snapshot

Despite the recent decline, the miner is still up by almost 2% in 2022. However, it is down by 17% over the past year and 6% over the past month.

For comparison, the ASX 200 is down 12% year to date and 10% since this time last year.

The post Could this be weighing down the Rio Tinto share price today? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• Could China ‘steel’ the show for the iron ore price?
• The iron ore price has fallen 15% in 2 weeks. So, is the Rio Tinto share price a buy or sell?
• ASX 200 midday update: BHP and Rio Tinto rebound, Westpac rated as a buy
• Rio Tinto share price sinks on iron ore weakness

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Most cryptocurrencies fell today, as the intense selling from last week resumed due to most of the same concerns about the Federal Reserve’s ongoing policies and the economy.

Over the past 24 hours (as of 9:50 a.m. ET today), the price of the world’s largest cryptocurrency, Bitcoin (CRYPTO: BTC), has traded more than 5% down, to roughly $20,780.

The price of the world’s second-largest cryptocurrency, Ethereum (CRYPTO: ETH), has traded nearly 7% down, and the price of the meme token Dogecoin (CRYPTO: DOGE) is down nearly 6%. 

So what

Cryptocurrencies have not fared well, as the Fed has turned hawkish this year in order to tackle inflation. That has included its raising its benchmark overnight lending rate, the federal funds rate, from practically zero to inside a range of 1.5% to 1.75% after its latest 75-basis-point (0.75%) rate hike last week.

As rates rise, riskier assets like cryptocurrencies don’t tend to fare as well because safer assets like U.S Treasury securities now yield more. In addition, Citigroup earlier today raised its expected likelihood of a recession to 50%.

“The global economy continues to be afflicted by severe supply shocks, which are pushing up inflation and driving down growth,” Citi’s chief global economist, Nathan Sheets, wrote in a research note. “But more recently, two further factors have burst onto the scene: Central banks are hiking policy rates with increasing vigor in their fight against inflation, and the global consumer’s demand for goods looks to be softening.”

The Fed has also begun reducing its massive (nearly $9 trillion) balance sheet, which means running off bond holdings. That will essentially remove liquidity from the economy, a move that could hurt Bitcoin even more.

“In a world where liquidity is plentiful, the bitcoins of this world do well,” Ian Harnett, the chief investment officer of Absolute Strategy Research, recently told CNBC. “When that liquidity is taken away — and that’s what the central banks are doing at the moment — then you see those markets come under extreme pressure.”

Harnett thinks the price of Bitcoin could drop to as low as $13,000, which would certainly drag down the rest of the crypto market with it.

Recently, there have been some large sellers of Bitcoin and pressure on investors as the price of Bitcoin drops. The crypto intelligence service Arcane Research noted recently that Bitcoin’s huge drop over this past weekend might have been a result of the largest Bitcoin spot ETF losing half of its assets under management.

Purpose Bitcoin ETF apparently lost more than 24,500 Bitcoin tokens last Friday, its largest since going public on the Canadian Stock Exchange in April 2021. The departure of the assets resulted in the ETF having to sell roughly $500 million of Bitcoin, according to Arcane Research, which can’t have been good for supply-and-demand dynamics. Arcane analysts believe the sudden exit of funds could have been caused by “a forced seller in a huge liquidation.” 

Now what

I certainly agree with Harnett that the price of Bitcoin could continue to march lower, as the Fed continues its balance sheet reduction efforts. However, trying to time markets is nearly impossible.

Long term, I do believe Bitcoin and Ethereum are here to stay and will be good long-term buys at these levels. I have never been a fan of Dogecoin because it has no use in the real world and no technical advantage over other cryptocurrencies, which is why I would recommend avoiding the meme token. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Bitcoin, Ethereum, and Dogecoin are down today appeared first on The Motley Fool Australia.

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More reading

• The ATO is collecting crypto taxes. Here are 5 handy expert tips come tax time
• These 3 cryptos are feeling the Elon Musk effect today
• What to expect from the Bitcoin price following last week’s thrashing
• Is Solana the next Bitcoin?
• Can Ethereum reach $5,000?

Bram Berkowitz has positions in Bitcoin, Dogecoin, and Ethereum. Citigroup is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin and Ethereum. The Motley Fool Australia owns and has recommended Bitcoin and Ethereum. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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