Category: Stock Market

The Pro Medicus Limited (ASX: PME) share price is falling by the wayside today regardless of the company announcing a positive update.

At the time of writing, Pro Medicus shares are down 1.25% to $53.93. This means that its shares have now dropped 10.5% in a month.

What’s dragging Pro Medicus shares lower?

A catalyst for the Pro Medicus share price falling into the red today is the broader market weakness.

The S&P/ASX 200 Index (ASX: XJO) is tumbling 1.72% lower to 7,205 points following the Dow Jones’ heavy losses overnight.

In today’s statement, Pro Medicus advised its wholly-owned United States (US) subsidiary, Visage Imaging, Inc has signed its equal-largest contract to date.

The 7-year, $40 million deal is with US leading healthcare provider, Novant Health.

Headquartered in North Carolina, Novant Health is a community-based integrated delivery network (IDN) that spans three states.

The company services 6 million patients annually across 15 medical centres and hundreds of outpatient facilities and physician clinics.

Based on a transactional licensing model, the contract will see Pro Medicus’ Visage products implemented throughout Novant Health. This includes its Visage 7 Enterprise Imaging Platform and Visage 7 Workflow module.

The suite will be employed in the Microsoft Azure cloud, delivering a unified diagnostic imaging platform across the network.

Planning for the rollout is to commence immediately, with initial go-lives targeted for the second half of the financial year.

The latest deal represents Pro Medicus’ seventh major North American contract in less than 18 months.

The health imaging software company has doubled down on its efforts to rapidly grow in the North American market.

Novant Health joins an increasing number of Visage clients that opt for a fully cloud-based solution. This is a rising trend amongst healthcare providers across the US.

Management commentary

Pro Medicus CEO, Dr Sam Hupert said:

… Like several of our other recent deals, it includes more than one of our products, in this case, Visage 7 Workflow as well as Visage 7 Viewer, validating our strategy of providing clients maximum flexibility by offering a highly modular, multi-product solution.

Our pipeline remains strong. Deals like this confirm our view that Visage 7, with its proven cloud-native technology and modular design, provides us with a significant strategic advantage that enables us to address opportunities across a growing segment of the market both in North America and other regions.

About the Pro Medicus share price

Over the past 12 months, Pro Medicus shares have accelerated to post a 102% gain, with year-to-date up 53%.

The company is trading on a price-to-earnings (P/E) ratio of 185.15 and commands a market capitalisation of roughly $5.7 billion.

The post Pro Medicus (ASX:PME) share price dips despite positive update appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
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• Why Afterpay, Mineral Resources, Pilbara Minerals, & Pro Medicus shares are falling
• The healthcare sector is weighing on the ASX 200 on Tuesday
• 2 small-cap ASX shares with an edge over rivals

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Pro Medicus Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Qantas Airways Limited (ASX: QAN) share price is outperforming the S&P/ASX 200 Index (ASX: XJO) as it’s reported that the international border opening is going to happen sooner.

Qantas shares are currently up 0.8%, it is worth noting that the ASX 200 is actually down 1.8% at the time of writing.

International border to reopen?

According to reporting by various news media outlets, including the Australian Financial Review, Australia may be getting closer to seeing international travel again.

The Prime Minister Scott Morrison is expected to announce later today that international borders could open as early as next month, helping people who are stranded overseas, or those wanting to leave the country.

All restrictions on vaccinated Australians will be lifted for inbound and outbound passengers once the 80% double dosed vaccinated rate has been reached.

The travel bans will be lifted on a state by state basis as each region passes the 80% mark. Some states, such as New South Wales, are further ahead with the vaccine progress than others.

Ultimately, the international borders are expected to open before Christmas. This could lead to home quarantine for arrivals, rather than using the current hotel system. Both NSW and South Australia are doing tests for this potential system.

The closed borders have seemingly impacted the Qantas share price since the onset of COVID-19 because of its limited ability to generate earnings from international flights.

However, Queensland Premier Annastacia Palaszczuk has said she hasn’t agreed to the plan yet. The Guardian quoted Ms Palaszczuk from her news conference today:

I’m not going to agree to anything when I haven’t seen any formal paperwork. It would be irresponsible and I think that Queenslanders would expect me to see some paperwork, to understand the issues before an announcement is made. So it’s a bit disappointing that we haven’t been given that due courtesy before National Cabinet.

What I’ve said clearly and Dr Young has said this and the Health Minister has said this. We need to be in a situation where every eligible person, so every eligible person in that cohort is offered a vaccine.

What could this mean for the Qantas share price?

Qantas predominately makes profit when flights are in the air, not when planes are stuck on the ground.

International borders opening up sooner may mean that Qantas can start generating international flight profit sooner.

Qantas said in its FY21 full year result that it suffered a $12 billion revenue impact from the COVID-19 crisis in FY21. It led to an underlying loss before tax of $1.83 billion and a statutory loss before tax of $2.35 billion.

The airline was already planning that from mid-December 2021, flights would start from Australia to COVID-safe destinations, which were/are (according to Qantas) likely to include Singapore, the US, Japan, the UK and Canada, as well as Fiji.

However, Qantas did say that a record performance by Qantas Freight was mostly offsetting the cost of idling international operations. It was still seeing “strong cash generation” and growth in members with its Qantas Loyalty business.

The post Qantas share price rises as border opening set to be brought forward appeared first on The Motley Fool Australia.

More reading

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• Qantas (ASX:QAN) share price falls amid ACCC report into COVID-19 impacts
• Why these ASX 200 travel shares are flying this Monday
• Here’s why the Qantas (ASX:QAN) share price hit a new 52-week high today
• Why the Qantas (ASX:QAN) share price is rallying 3% on Thursday

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 Bruce Jackson.

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2021 has seen investors chasing a few hot trends. Over the year to date, we have had spiking interest in a range of ASX shares, including renewable energy companies and uranium shares. But one of the hottest and most consistent areas of interest are lithium shares.

2021 has been quite a year for the lithium sector. We have seen companies like Pilbara Minerals Ltd (ASX: PLS) and Orocobre Limited (ASX: ORE) explode in value. Pilbara is currently up more than 135% year to date, and Orocobre is up more than 91%.

So with investors scrambling to get a foothold in the promising lithium space, there might be a few investors wondering if they can look to an exchange-traded fund (ETF) instead. ETFs are used more and more these days for sector-specific investments after all. The ASX boasts ETFs that track the gold sector, oil futures and even the price of platinum. So what are investors’ options when it comes to lithium?

Well, the ASX does have one dedicated lithium ETF. That would be the ETFS Battery Tech & Lithium ETF (ASX: ACDC).

ACDC ETF delivers on lithium

The rather aptly named ACDC ETF is a relatively new one, having started life back in August 2018. Since then, it has managed to book an average annual return of 27.7%.

It’s also managed to average 27.5% per annum over the past 3 years, and an eye-watering 65.5% over just the past 12 months.

So what does this ETF invest in? Well, according to the provider, ACDC “offers investors exposure to the energy storage and production megatrend, including companies involved in the supply chain and production for battery technology and lithium mining”.

Looking at its current portfolio, we can see that this ETF is tilted towards the United States, Japan and South Korea. 22.4% of its holdings are domiciled in the US, with another 21.7% in Japan and 11.9% in South Korea. Australia is next up with an 8.3% allocation.

We recently went through ACDC’s holdings here on the Fool. But if you’re up for a refresher, here’s how the current ACDC portfolio stands, as of 31 August:

1. BYD Co Ltd with a portfolio weighting of 5.3%
2. Pilbara Minerals Ltd (ASX: PLS) with a weighting of 5.2%
3. Livent Corp (NYSE: LTHM) with a weighting of 4.1%
4. SolarEdge Technologies Inc (NASDAQ: SEDG) with a weighting of 3.9%
5. Samsung Electronics Co Ltd (KRX: 005930)with a weighting of 3.5%
6. Bollore SE (OTCMKTS: BOLL) with a weighting of 3.4%
7. Eos Energy Enterprises Inc (NASDAQ: EOSE) with a weighting of 3.4%
8. Tesla Inc (NASDAQ: TSLA) with a weighting of 3.3%
9. ABB Ltd (NYSE: ABB) with a weighting of 3.3%
10. Minerals Resources Limited (ASX: MIN) with a weighting of 3.1%

However, ACDC is not ASX investors’ only option, if one is willing to look beyond the ASX boards. My Fool colleague Tony recently discussed a US-based lithium ETF as well – the Global X Lithium & Battery Tech ETF (NYSEARCA: LIT). It seems investors have a few options if they want to pursue the lithium space for their portfolios today.

The post Can you buy a lithium ETF on the ASX today? appeared first on The Motley Fool Australia.

More reading

• Own the ETFS Battery Tech & Lithium ETF (ASX:ACDC)? Here’s what you’re invested in

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 Bruce Jackson.

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The NEXTDC Ltd (ASX: NXT) share price was out of form in September.

Weakness in the tech sector led to the data centre operator’s shares falling 9% during the month.

This means the NEXTDC share price is now down 16% from its 52-week high.

Is the NEXTDC share price in the buy zone?

One broker that is likely to see the recent weakness in the NEXTDC share price as a buying opportunity is Morgans.

According to a recent note, the broker has an add rating and $14.64 price target on its shares.

Based on the current NEXTDC share price of $11.86, this implies potential upside of 23% over the next 12 months.

What did Morgans say?

Morgans was pleased with the company’s performance in FY 2021 and its outlook for the year ahead.

It commented: “NXT’s FY21 result was slightly better than guidance and our forecasts. FY22 revenue and EBITDA guidance is in line with market expectations. For both years growth was/is expected to be 20-30% pa. It was a good year and a good outlook.”

However, it is the company’s long term outlook that makes Morgans particularly bullish on the NEXTDC share price.

The broker explained: “We retain our Add recommendation and highlight that NXT remains our preferred pick. We see a clear pathway for long-term growth, substantially higher EBITDA and material free cash flow, over the medium term. In the shorter term we think there are catalysts to continue driving the share price higher.”

One of those catalysts is the massive structural growth of cloud and digitisation which continues to require significant digital infrastructure. Morgans notes that NEXTDC is a key supplier at the forefront of this trend.

As a result, it feels there is a high likelihood of Cloud Service Providers (CSPs) exercising the options they have for capacity within its centres.

It commented: “MW contracted but not yet billing and BAU sales through the channel unpin NXT’s capacity to generate ~$200m of EBITDA in FY23. With new facilities coming online and management continuing to invest in growing and evolving the business, our forecast is for $186m (with upside risk). Options with CSPs could push this to $300m (assuming 100% billing).”

Morgans appears to believe this could cause a significant rerating of the NEXTDC share price if the bullish case plays out.

All in all, this could make it worth considering NEXTDC as a long term investment.

The post Why this broker sees 23% upside for the NEXTDC (ASX:NXT) share price appeared first on The Motley Fool Australia.

More reading

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• ASX 200 tech correction? 5 of the worst-hit shares
• Why ASX tech shares are crashing on Wednesday
• Technology shares are dragging the ASX 200 down on Tuesday

Motley Fool contributor James Mickleboro owns shares of NEXTDC 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 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 Bruce Jackson.

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The Novonix Ltd (ASX: NVX) share price was on fire again in September.

The lithium-ion battery technology company’s shares were one the best performers on the All Ordinaries index with a 47% gain.

What makes this all the more impressive is that in August, the Novonix share price rose 75%.

This means its shares are now up by 436% since the start of the year.

Why is the Novonix share price shooting higher?

Investors have been bidding the Novonix share price higher over the last couple of months due to a number of positive developments.

One of those was its agreement with Phillips 66, which saw the US energy giant acquire a 16% stake in Novonix.

Phillips 66 believes this investment will support its development of an entirely domestic supply chain for the growing US electric vehicle (EV) market and other energy storage systems.

Whereas Novonix revealed that Phillips 66’s investment will provide it with the capital needed to support growth and ongoing R&D. This includes continuing to scale its synthetic graphite production and developing new technologies for higher-performance energy storage applications.

What else is boosting its shares?

Also giving the Novonix share price a boost were changes in the S&P/ASX Indices at the September rebalance.

Those changes saw Novonix’s shares join the ASX 300 index at the commencement of trade on 20 September.

When a share is added to an index it can often lead to increased demand on the buy side. This is due to index funds needing to buy shares.

In addition, some fund managers have strict investment mandates only allowing them to buy shares from certain indices. This could mean there were some fund managers waiting in the wings to invest once they were given the opportunity to do so.

Investors will no doubt be hoping that October is just as successful for Novonix’s shares. Time will tell if it is.

The post Why the Novonix (ASX:NVX) share price rocketed 47% higher in September appeared first on The Motley Fool Australia.

More reading

• Which ASX 300 shares are leading the way mid-week?
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• Which ASX 300 shares are the top movers today?
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• Novonix (ASX:NVX) share price leaps to another new all-time high

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 Bruce Jackson.

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The Newcrest Mining Ltd (ASX: NCM) share price will be in focus today after the gold price firmed even as Wall Street crashed.

Gold futures added around 2% to US$1,757 an ounce when the S&P 500 tumbled 1.2%. This is setting up the S&P/ASX 200 Index (Index:^AXJO) for a 1.6% fall this morning.

Respite for the Newcrest share price

But the Newcrest share price could outperform thanks to the gold price. Of course, it isn’t only Newcrest that will benefit from the bounce in the precious metal.

Other ASX gold shares like the Evolution Mining Ltd (ASX: EVN) share price and Northern Star Resources Ltd (ASX: NST) share price should benefit too.

Best value ASX gold shares to buy

However, several experts believe that Newcrest represents the best value buy in the sector. This is in part due to its scale. Newcrest is the largest gold producer listed on the ASX.

The miner operates both open bit and underground mines at key projects Cadia, Lihir, Telfer/Havieron, Fruta del Norte and Red Chris.

Newcrest has recorded resources of 119.4 million ounces of gold, according to Macquarie Group Ltd (ASX: MQG). That’s miles ahead of the second biggest miner, Norther Star, which has 56.5 million ounces of gold.

Scale and cost to support the Newcrest share price

What’s more, the Newcrest share price benefits from being having one of the lowest cost operations among its peers. It’s C1 cash cost (a measure of operating costs) stands at under $400 (US$289) an ounce.

It’s all-in sustaining cost (a more complete measure of cost) comes in at just over $1,000 (US$723) an ounce.

This leaves Newcrest plenty of profit margin even if the gold price were to continue its retreat after hitting record highs of over US$2,000 an ounce.

Macquarie is recommending the Newcrest share price as “outperform” with a price target of $31 a share.

Cloudy outlook for gold

Gold has lost its lustre since bond yields started rising. The 10-year US government bond yield has rebounded to over 1.5% as the Federal Reserve indicated that it was winding back its Quantitative Easing (QE) program and could hike rates as early as next year.

Both QE and record low interest rates have suppressed bond yields around the world, but the tide is turning.

That’s not good news for gold, which is seen as a rival to US government bonds. Both asset classes are regarded as safe-haven investments.

Foolish takeaway

The key difference is that bonds pay a regular distribution. As yields rise, investors have a greater incentive to buy government debt – all else being equal.

Expectations of a strong economic recovery that is prompting central banks to curtail QE and lift rates is also hurting gold. Gold tends to do better during times of economic uncertainty.

For these reasons, the Newcrest share price and other gold shares have lagged the market. Newcrest has lost 16% of its value since the start of this calendar year when the ASX 200 has rallied 10%.

The post Here’s why the Newcrest (ASX:NCM) share price is in the spotlight today appeared first on The Motley Fool Australia.

More reading

• These were the 5 best performing ASX 200 shares in September
• These were the 5 worst performing ASX 200 shares in September
• 5 things to watch on the ASX 200 on Friday
• 2 ASX 200 dividend shares named as buys for October
• Here’s why the Northern Star (ASX:NST) share price has lost 11% in 2 weeks

Motley Fool contributor Brendon Lau owns shares of Macquarie Group Limited and Newcrest Mining 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 owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Last month was lousy for the AMP Ltd (ASX: AMP) share price despite no news having been released by the financial services company.

AMP’s stock started September trading at $1.10.

The month just gone saw it hit an all-time low. It reached 88.5 cents for the first time in its 22-year life as an ASX-listed company on 21 September.

At the time of writing, the AMP share price has rebounded slightly. It is currently 99 cents.

That represents a 10% drop over the course of September.

For comparison, the S&P/ASX 200 Index (ASX: XJO) fell 2.6% over the month just been.

So, what drove the AMP share price downwards in September? Let’s take a look.

The month that was for AMP

The AMP share price had an awful September on the ASX, dropping 10% despite no news having been released by the company.

While there was no news from AMP, the company hit headlines a number of times. It has had a lawsuit taken up against it and the future control of its AMP Capital Wholesale Office Fund has been questioned.

However, as there’s been no price sensitive news out of AMP since August, its poor month’s performance is likely the continuation of an existing trend.

The AMP share price has been generally falling since 2018, when the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry dragged the financial institution through the coals.

The Royal Commission uncovered misconduct committed by AMP. It led to AMP admitting it had deceived the Australian Securities and Investment Commission (ASIC) and charged its customers fees without providing a service.

ASIC dropped its investigation into AMP’s alleged criminal misconduct in July. Though, the good news hasn’t noticeably bolstered the financial services provider’s stock in the long term.

AMP’s planned demerger might have also weighed on its share price last month. AMP announced its plan to demerge from its Private Markets business in April.

The company provided an update on the demerger in August. It hopes to be running AMP and its Private Markets business separately by the end of 2021 ahead of a demerger in the first half of 2022.  

AMP share price snapshot

Last month’s poor performance has added to AMP’s recent woes.

Its stock’s value has fallen 36.5% over the course of 2021. It is also trading for 26.6% less than it was this time last year.

The post Why did the AMP (ASX:AMP) share price have such a terrible September? appeared first on The Motley Fool Australia.

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• AMP (ASX:AMP) share price on watch amid latest legal battle
• These 3 ASX 200 shares are topping trading volumes today

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 Bruce Jackson.

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The EML Payments Ltd (ASX: EML) share price has had a rocky 2021 when compared to its peer, Tyro Payments Ltd (ASX: TYR).

Since the start of the year, EML shares have tumbled around 7% while Tyro shares have soared above 20%.

This is despite the EML share price adding 3.46% during yesterday’s market close, finishing at $3.89.

Let’s take a look at the comparison between the two companies.

Compare the pair

While broader market volatility has played a part this year, the EML share price has suffered particularly in September.

In fact, the payments company’s shares have fallen around 5% last month, while Tyro has gained 5%.

EML updated the market on Thursday, advising it has completed the acquisition of leading European payments provider, Sentenial. However, while the formal procurement was nothing unexpected, the company has been generally quiet since its full-year results in mid-August.

On the other hand, Tyro has also been silent on the news front, only reporting its usual weekly trading update. Although during late August, two brokers weighed in on the company’s share price.

Analysts at Macquarie raised their price target for Tyro shares by 7.1% to $3.75. Investment firm, JPMorgan followed suit but cut its rating by 6.7% to $4.20. Based on the current share price of $3.89, this implies an upside of 7.4%.

It is worth noting though, EML shares did strongly rise throughout the year, before plummeting 45% in May. Regulatory concerns over the company’s anti-money laundering financing compliance from the Central Bank of Ireland led investors to flee.

Since then, its shares have slowly been ticking upwards, but are well down from April 2021 levels. A complete contrast to Tyro shares which have moved higher throughout the year.

About the EML share price

When zooming out to share price performance over a 1 year period, EML shares have in fact travelled 35% higher. At current, the share price sits in the middle of its 52-week range of $2.47 to $5.89.

On valuation grounds, EML commands a market capitalisation of roughly $1.45 billion and has approximately 373 million shares on issue.

The post How has the EML (ASX:EML) share price been performing compared to Tyro? appeared first on The Motley Fool Australia.

More reading

• Why Damstra, EML, Orica, & South32 shares are storming higher
• ASX 200 tech correction? 5 of the worst-hit shares
• Why ASX tech shares are crashing on Wednesday
• September hasn’t been a great month so far for the EML (ASX:EML) share price
• 3 beaten-up ASX shares that are exciting us: experts

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended EML Payments and Tyro Payments. The Motley Fool Australia owns shares of and has recommended EML Payments. The Motley Fool Australia has recommended Tyro Payments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Are you looking for some dividend shares to boost your income portfolio? If you are, then you might want to look at the ones listed below.

Here’s why these ASX dividend shares could be in the buy zone:

Adairs Ltd (ASX: ADH)

The first dividend share to look at this month is Adairs.

This homewares and home furnishings retailer was on form in FY 2021. It delivered a 28.5% increase in sales to $499.8 million and the almost doubling of its earnings before interest and tax to $109.1 million.

The team at UBS are very positive on the company and believe the Adairs share price is trading at an attractive level. The broker currently has a buy rating and $5.40 price target.

UBS is also forecasting fully franked dividends of 19.6 cents per share in FY 2022 and then 29.9 cents per share in FY 2023. Based on the current Adairs share price of $4.05, this will mean yields of 4.8% and 7.3%, respectively.

Transurban Group (ASX: TCL)

Another ASX dividend share to look at this month is Transurban.

This leading toll road operator has a collection of important roads in Australia and North America such as CityLink in Melbourne and the Cross City Tunnel and Eastern Distributor in Sydney. It has also just announced an agreement to acquire the remaining stake in WestConnex from the NSW government.

While COVID-19 restrictions have been weighing on traffic volumes, the vaccine rollout is going well and Australia’s reopening is now in sight. This is expected to lead to a sharp rebound in traffic volumes in 2022.

Ord Minnett is positive on the company. Its analysts currently have a buy rating and $16.20 price target on its shares. The broker is also forecasting dividends per share of 43 cents in FY 2022 and then 64 cents in FY 2023.

Based on the current Transurban share price of $14.16, this will mean yields of 3% and 4.5%, respectively.

The post 2 quality ASX dividend shares analysts rate as buys appeared first on The Motley Fool Australia.

More reading

• Transurban (ASX:TCL) share price slides as truckies push back on tolls
• 2 ASX dividend shares that could be buys in October 2021
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• Is the Transurban (ASX:TCL) share price a buy after the WestConnex acquisition?
• Top brokers name 3 ASX shares to buy next week

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. owns shares of and has recommended ADAIRS FPO. The Motley Fool Australia owns shares of and has recommended ADAIRS FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The BHP Group Ltd (ASX: BHP) share price tumbled in September as weak iron ore prices deepened a rout in shares of iron ore-related companies.

Its 14% fall in August was painful, but the 17% decline in September felt like the nail in the coffin.

The BHP share price has now erased all its recent hard-earned gains, down 13% year-to-date and up just 2.9% in the last 12-months. 

Why the BHP share price continues to free fall in September 

China fully committed to emission targets

An acceleration in China’s efforts to control steel production and emphasis on energy consumption weighed on the BHP share price last month. 

Chinese leaders have made a commitment to hit carbon reduction targets, even if it comes at the expense of extreme energy rationing and damaging its industrial output. 

S&P Global reported that China is on track to reduce its 2021 crude steel output below 2020 levels for the first time since 2016. 

China’s August crude steel output declined 13% year-on-year and was down 4.1% month-on-month to 80.24 million metric tonnes, the lowest since March 2020. 

According to S&P calculations, China’s crude steel output is “likely to drop further in September … and remain lower in October, as a few major steelmaking provinces have widened steel output cuts since early September due to energy consumption controls.” 

Rise in steel scrap consumption

Chinese policymakers are targeting the increased use of recyclables to meet its carbon neutrality goals.

According to S&P Global, this could see a rise in steel scrap consumption, replacing iron ore.

The National Development and Reform Commission sees China’s 2025 steel scrap usage rising to 320 million mt on carbon neutrality goal, its latest data showed. China used 260 million mt steel scrap back in 2020, replacing 410 million mt 62% iron ore.

Chinese manufacturing figures slump

A slowdown in the Chinese economy could add further insult to injury for the BHP share price.

China’s official manufacturing purchasing managers’ index (PMI), a survey of sentiment among factory owners, fell to 49.6 in September from 50.1 in August.

These figures have now slumped to the lowest levels since the initial pandemic outbreak.

The post Why the BHP (ASX:BHP) share price tanked 17% in September appeared first on The Motley Fool Australia.

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Motley Fool contributor Kerry Sun 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 Bruce Jackson.

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