Category: Stock Market

I recently came across this humorous insight: ‘My wallet is like an onion. Opening it makes me cry.’ This perfectly captures the challenges of managing expenses as living costs continue to rise.

Recent statistics show that inflation is eroding purchasing power, making it crucial to ensure your super balance is growing at a pace that will support a comfortable retirement.

This raises an important question: Is your superannuation balance growing fast enough to keep up with rising living costs?

How much has inflation impacted living costs in retirement?

In May, the Association of Superannuation Funds of Australia (ASFA) published the ASFA Retirement Standard report for the March 2024 quarter.

According to the ASFA report, the cost of funding a comfortable lifestyle rose 3.3% from a year ago to a record high of $72,663 per year for couples and $51,630 per year for singles.

ASFA CEO Mary Delahunty says:

Retirees continue to feel considerable cost of living pressure on their household budgets. Fortunately, in the past three months, we’ve seen the pace of price rises ease somewhat in key spending categories, namely food and fuel.

Here are the key points from the report by spending category:

• Medical and hospital services increased by 2.3% in the March 2024 quarter, higher than the 1.2% rise in the previous quarter.
• Insurance prices rose sharply by 3.7% from the previous quarter and 16.4% annually, driven by higher reinsurance and claims costs, marking the strongest annual increase since 2001.
• Annual food costs increased by 3.8%, down slightly from 4.5% in the previous quarter. Bread and cereal prices rose by 7.3% annually, and dairy products by 4.1%, partially offset by a 0.7% decrease in meat and seafood prices over the quarter.
• Automotive fuel prices decreased by 1.0% on average in the March quarter, with an average unleaded petrol price of $1.94 per litre.
• Electricity prices rose moderately by 2.0% annually, but excluding Energy Bill Relief Fund rebates, prices increased by 17.0% over the period, impacting many self-funded retirees.
• Domestic travel and accommodation costs increased by 1.3% in the quarter, reflecting sustained demand and elevated prices for domestic accommodation and airfares.

Investment returns in superannuation

The good news is that the average investment returns from superannuation funds have generally kept pace with inflation.

ASFA estimates that, based on historical data, superannuation funds achieved an average annual return of 7.4% over the last 10 years to June 2023. This comfortably exceeds the average consumer price increase of 2.8% during the same period.

Period (% pa)	Fund returns to June 2023	Real returns (vs CPI)
1 year	9.2%	3.0%
5 years	5.8%	2.3%
10 years	7.4%	4.6%
20 years	7.1%	4.3%
30 years	7.3%	4.5%

These average returns include all asset classes, such as shares, bonds, and alternative investments. Interestingly, the average return is similar to that of the Vanguard Australian Shares Index ETF (ASX: VAS), which delivered 7.85% per year over the last 10 years to May 2024.

While real returns, meaning the growth in purchasing power, are under pressure, the golden rules for a comfortable retirement remain simple: spend less, save more, and keep investing.

The post Is your super balance growing fast enough to keep up with rising living costs? appeared first on The Motley Fool Australia.

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• Here are the top 10 ASX 200 shares today
• Down 70% in a year, this ASX stock has just entered voluntary administration
• AML3D share price surges another 38% today! What’s going on?
• 3 top ASX retirement shares to buy for FY25

Motley Fool contributor Kate Lee 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.

Keen-eyed investors will have noted Woodside Energy Group Ltd (ASX: WDS) shares curling off their 3-month lows at the end of June. After a difficult past year of trade, the ASX energy stock has now clipped a 4% gain in the past month.

Many investors may wonder how Woodside compares to some of its ASX energy peers, particularly its competitor Santos Ltd (ASX: STO). As of today, Woodside shares trade at $29.06 per share, while Santos shares are priced at $7.68 per share.

Brokers rate both Woodside and Santos as potential buys in the energy sector. But which stock might be the better investment? Let’s take a look.

Why consider Woodside shares?

Woodside shares have faced a challenging past year, dropping 16% into the red. However, some experts see this as a buying opportunity.

Bell Potter recently suggested that Woodside shares could be “pretty good buying at these levels,” even projecting a potential rise above $30 in the next three to five months.

The firm highlights a seasonal trend where investors shift into underperforming stocks in July, potentially boosting Woodside’s price.

Analysts are also optimistic about Woodside’s major growth projects like the Scarborough and Pluto Train 2 developments. Morgans rates Woodside a buy with a price target of $36.00 per share, implying a 24% upside.

Goldman Sachs, while maintaining a neutral rating on the stock, further acknowledges Woodside’s stable project pipeline.

“Key projects are progressing well”, it said in a February note, “with Scarborough and Pluto Train 2 expected to deliver the first LNG cargo in 2026.”

Additionally, Woodside’s trailing dividend yield currently stands at 7.43%, with the last dividend being $2.16 per share.

Is Santos a stronger buy?

Santos shares have performed better than Woodside shares over the past year, up 0.79%.

Despite the relative gains, investors have valued the company at a lower multiple compared to Woodside shares.

Santos trades on a price-to-earnings (P/E) ratio of 11.85 times, cheaper relative to Woodside’s P/E of 22.30 times. This says investors are paying $11.85 for every $1 of Santos’ earnings versus $22.30 for Woodside.

Additionally, Santos offers a trailing dividend yield of 3.67% with its trailing payout of 40 cents per share.

Goldman Sachs reinstated Santos as a buy with a price target of $8.35 in February. It forecasts 10% annual production growth over the next 3 years, which it says could translate into growth in market value.

It expects 2024 “to be the trough for Santos production and earnings”, as it sees startup at its Barossa and Pikka sites throughout 2025-2026.

Goldman sees Santos trading at a significant valuation discount (it was at 0.8 times its net asset value in the February note). Its price target could provide an upside of around 7.7% from current levels.

The bottom line

The consensus among analysts is that both stocks have potential upsides. CommSec rates both Santos and Woodside shares as a buy based on the consensus rating of analyst estimates. Meanwhile, Goldman’s buy rating on Santos is backed by expectations of robust production growth offsetting global gas price weakness.

Both Woodside and Santos have their strengths. Woodside offers a higher dividend yield and promising long-term projects. Santos, on the other hand, appears to be trading at a more attractive valuation with significant production growth expected in the coming years. As always, remember to conduct your own due diligence.

The post Are Woodside shares a better buy than rival Santos? appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Wednesday
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• Could beaten-up Woodside shares offer ‘Safe buying with limited downside’?
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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 positions in and has recommended Goldman Sachs Group. 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.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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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 positions in and has recommended Altium. The Motley Fool Australia has recommended Flight Centre Travel Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Retail data released today shows a boost in sales, but the news offers little comfort for one troubled ASX stock.

According to the Australian Bureau of Statistics, retail turnover increased 0.6% in May. As my colleague Bernd Struben noted, retailers won’t be celebrating yet, with much of the growth attributed to shoppers cashing in on discounted end-of-year sales.

It’s a relatively uninspiring update for ASX retail shares. The data indicates an industry still hobbled by high interest rates, an environment that has partially slain another Australian business today.

Which ASX stock is looking for a lifeline?

The outcome of a strategic review at Booktopia Group Ltd (ASX: BKG) has been announced after the company entered a trading halt on 13 June.

Australia’s largest online bookstore has entered voluntary administration.

As per the announcement, Booktopia is now in the hands of specialist advisory and restructuring firm McGrathNicol.

Partners Keith Crawford, Matthew Caddy, and Damien Pasfield are the acting administrators conducting an ‘urgent assessment’ of Booktopia’s options, including a sale or recapitalisation of the company.

The dire situation follows more than three years of lacklustre performance since the stock popped onto the ASX. During this time, the company’s debt has grown alongside a dwindling cash pile, consumed by unprofitable operations, as depicted in the chart above.

On 31 March 2024, Booktopia had $212,000 in cash and $959,000 in undrawn finance facilities. However, based on recent negative free cash flows, this would be enough to last a month or two.

What’s next?

Trading in Booktopia shares will remain suspended while the administrators try to revive the struggling business. By Monday, 15 July, a meeting with creditors, entities to which Booktopia owes money, will occur.

The ASX stock is down 72% over the last year. For those who have been invested since its public debut, shares are 98.4% lower, last trading at 4.5 cents apiece.

The post Down 70% in a year, this ASX stock has just entered voluntary administration appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Booktopia Group. 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.

Investors in ASX defence stocks are buzzing as the AML3D Ltd (ASX: AL3) share price surged another 37.7% to close at 14 cents apiece on Wednesday. This follows an enormous run for the ASX small-cap stock, which has rallied more than 125% in a month.

It is up almost 70% this week alone.

Comparatively, the benchmark S&P/ASX 200 index (ASX: XJO) has lifted 6.8% over the past 12 months.

Let’s dive into what’s driving this performance and whether it’s a trend that could continue.

Why is the AML3D share price soaring?

The impressive rally in the ALM3D share price is most likely attributed to several positive developments for the company.

This week, AML3D announced a $1.1 million sale of its 2600 Edition ARCEMY system to Laser Welding Solutions, a supplier to the US Navy.

This system will support Laser’s alloy qualification program, which has been operational under a lease agreement since September 2023. The deal includes a one-year service and maintenance contract, adding to AML3D’s recurring revenue stream.

Earlier in the year, back in February, AML3D reported a 936% increase in half-year revenues to $1.51 million, compared to $146,115 in the prior corresponding period.

In May, the company secured a $350,000 contract with the Australian Government, alongside a $1.54 million order from the US Department of Defence.

AML3D then received a $1.12 million grant from the South Australian Economic Recovery Fund to develop its proprietary metal 3D printing technology.

These achievements have positioned the AML3D share price front and centre of the ASX aerospace and defence basket at the start of FY25.

What’s next for AML3D?

While AML3D has been making headlines, it’s worth noting that other ASX defence-related stocks, like DroneShield Ltd (ASX: DRO), have also seen significant gains.

DroneShield shares, for instance, have posted a 617% increase over the past year and more than 410% return year-to-date in 2024. It, too, had a number of recent contract wins with the US Government.

The question is, will AML3D’s contract wins and rapid revenue growth suggest its share price has a similar potential for future outsized returns as well?

AML3D is focused on getting its advanced manufacturing technology in with the US Navy supply chain. Its announcement on the ARCEMY sale to the Navy on Tuesday made a detailed note of this.

The company’s CEO, Sean Ebert, expressed confidence in AML3D’s ability to capitalise on opportunities within the US Defence sector, saying:

The continuing momentum within our US scale-up strategy underpins the investment we are making in our US manufacturing hub and headquarters at Ohio. We are looking to maximize the opportunities we have across the US Defence sector, especially the Navy’s submarine industrial base, but also across US-based, global Tier 1 Oil & Gas, Marine and Aerospace companies.

Foolish takeaway

AML3D’s recent performance and promising outlook could make it an exciting prospect for investors.

However, as with any high-growth stocks, potential investors should remain mindful of the risks and volatility involved. Keep an eye on AML3D’s future announcements to gauge whether this upward momentum can be sustained.

The post AML3D share price surges another 38% today! What’s going on? appeared first on The Motley Fool Australia.

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• Move over DroneShield: This ASX defence stock is up 67% in a month!

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 positions in and has recommended DroneShield. 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.

If you’re currently building a retirement portfolio then you may be on the lookout for some ASX shares to add to it.

The good news is there is no shortage of quality options to choose from on the Australian share market.

But which ones could be buys right now? Let’s take a look at three that analysts rate as buys:

CSL Limited (ASX: CSL)

The first ASX retirement share to look at is CSL. It is one of the world’s leading biotechnology companies.

CSL has been growing at a solid rate for years thanks to its in-demand product portfolio, investment in research and development, and acquisitions. The former includes therapies such as Privigen, Hizentra, Idelvion, and Afstyla.

And while its shares don’t provide any meaningful income, they could provide strong returns over the coming years. That’s because Macquarie has an outperform rating and $330.00 price target on them. The broker also sees potential for its shares to rise beyond $500 in the next three years thanks to its positive outlook.

Telstra Group Ltd (ASX: TLS)

A second ASX retirement share that could be a buy is telco giant Telstra.

It arguably ticks a lot of boxes when it comes to retirement portfolio holdings. That’s because it has defensive qualities, a good dividend yield, and a positive growth outlook.

In respect to the latter, Goldman Sachs highlights that its “low risk earnings (and dividend) growth” across FY 2022 to FY 2025 is “attractive.”

Speaking of dividends, Goldman Sachs is forecasting fully franked dividends per share of 18 cents in FY 2024 and 18.5 cents in FY 2025. Based on the current Telstra share price of $3.62, this will mean yields of 5% and 5.1%, respectively.

The broker also sees decent upside for its shares with its buy rating and $4.25 price target.

Transurban Group (ASX: TCL)

A third ASX retirement share to consider is Transurban. It is the toll road giant with a portfolio of roads across Australia and North America. In addition, it has a significant project pipeline that should support its long-term growth.

As with Telstra, Transurban has defensive qualities. After all, these roads are always in need, particularly given population growth and urbanisation. It also has positive exposure to inflation, which is a good thing in the current environment.

Citi currently has a buy rating and $15.50 price target on its shares. It also expects 5%+ dividend yields in the coming years.

The post 3 top ASX retirement shares to buy for FY25 appeared first on The Motley Fool Australia.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL, Goldman Sachs Group, Macquarie Group, and Transurban Group. The Motley Fool Australia has positions in and has recommended Macquarie Group and Telstra Group. The Motley Fool Australia has recommended CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Domino’s Pizza Enterprises Ltd (ASX: DMP) shares had a difficult end to FY24 and are down 27% in the past 12 months. They are currently swapping hands at $35.02 per share.

Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is around 2% higher over the same time.

Investors were quick to unload their stock in the company after it released a trading update in January, advising its H1 FY24 profit numbers were lower than expected.

The forewarning – whilst polite – was not received well by the market. The stock fell from above $57 to $39.50 in just one session.

I’m not sure the FY24 listing of Guzman Y Gomez Ltd (ASX: GYG) made things any easier for the stock either.

As we look ahead to FY25, investors are keen to understand what the future might hold for Domino’s Pizza shares. Here’s what the experts are saying.

Could Domino’s Pizza shares rebound in FY25?

Analysts are optimistic about the potential for a rebound in Domino’s Pizza shares. According to investment bank Citi, based on its target price of $44.50 per share, Domino’s could see a 22% increase.

This bullish outlook follows the company’s investor tour in France, where Citi analyst Sam Teeger noted the potential for “better days ahead” despite recent struggles.

Analysts at Goldman Sachs also attended the tour. In a May note, the broker highlighted a positive shift in management’s focus towards improving store profitability.

We view more positively a higher management commitment to store unit profitability via lifting Average Weekly Unit Sales (AWUS) largely via Average Weekly Order Count (AWOC) with a combination of higher aggregator contribution, fixing carry-out, new product development as well as higher brand marketing.

It also notes the pizza chain’s new third-party partnerships, such as Uber Eats in France, as another potential driver of growth.

What are the other drivers for Domino’s Pizza shares?

Citi isn’t alone in its optimism. Ord Minnett also sees significant upside potential, rating Domino’s Pizza shares a buy with a price target of $44.40.

Otherwise, the stock is rated a buy from the consensus of analyst estimates, per CommSec.

This confidence stems from expected growth in sales and earnings as the company adapts to changing consumer preferences and market conditions.

Domino’s long-term expansion strategy is a critical factor in this. According to my colleague Tristan, the company aims to approximately double its total store count by 2033.

It is specifically targeting growth in Europe and Asia Pacific, but in Australia and New Zealand, it plans to reach 1,200 stores by 2027/2028. This growth may or may not positively affect Domino’s Pizza shares.

Goldman Sachs explained that Domino’s management is focused on improving the company’s unit economics. Efforts include reducing food and delivery costs, increasing digital spending to attract new customers, and enhancing product quality and delivery times.

The broker noted that “management will also lean further into digital initiatives, including Germany stepping up loyalty rewards in CY24, rolling out digital kiosks…”. Digital kiosks – what a time to be alive.

Challenges and risks ahead

Despite the optimistic projections, there still could be risks to consider. Morgan Stanley’s analysis into GLP-1 weightloss drugs highlights the potential impact of labels such as Ozempic.

The thinking is that widespread use of the compound could reduce the consumption of high-calorie foods, including pizza. If correct, this could pose a challenge for Domino’s Pizza shares.

Goldman Sachs also points out that while there is a positive shift towards improving store profitability, “current franchisee payback periods at ~4-5 years for Germany and Netherlands and ~4.5-6 years for France vs target of ~3 years” indicate that there is still work to be done.

Foolish takeaway

If Citi and Ord Minnett’s positive forecasts hold true, Domino’s shares could see a significant rebound in FY25. The company is positioned for potential growth with ambitious expansion plans and efforts to improve profitability. As always, it is crucial to weigh the risks and stay informed before investing.

The post Down 22% in FY24, what’s in store for Domino’s Pizza shares in FY25? appeared first on The Motley Fool Australia.

More reading

• How does the Guzman Y Gomez ASX valuation compare to Domino’s?
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• Is Guzman y Gomez stock too expensive?
• Here are the top 10 ASX 200 shares today

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 positions in and has recommended Domino’s Pizza Enterprises and Goldman Sachs Group. The Motley Fool Australia has recommended Domino’s Pizza Enterprises. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

It’s been a fairly happy Wednesday for the S&P/ASX 200 Index (ASX: XJO) and many ASX 200 shares so far today. At the time of writing, the ASX 200 is up a decent 0.25%, trading at 7,737.30 points. But the CSL Ltd (ASX: CSL) share price is doing even better this hump day.

CSL shares closed at $292.08 each yesterday evening. But today, the ASX 200 healthcare giant is up an enthusiastic 0.42% to $293.30.

Now while that gain would obviously be a welcome one for CSL investors, it still leaves this company down by more than 4% from its February 52-week high of $306.42.

But CSL owners would be used to a bit of stagnation by now.

After all, this is a company that last saw an all-time high (over $340 a share) back in early 2020. since then, CSL has pretty much treaded water, barring an unfortunate episode last year that saw the company get down to under $230 a share. 

Check that all out for yourself below:

However, this CSL share price stagnation has caught the eyes of a few ASX experts.

ASX experts rate CSL share price as a buy

One such expert is Toby Grimm of Baker Young. Speaking to The Bull this week, Grimm gave CSL a ‘buy rating. Here’s what he said in full:

This blood products company continues to screen as undervalued relative to its historic multiples and peers. New products and improving margins are expected to drive compound annual net profit growth of about 21 per cent over the next three years.

No doubt CSL investors will find that view comforting.

But Grimm isn’t the only one eyeing off CSL right now. As my Fool colleague James covered last month, ASX brokers Morgans and Macquarie both see value in the CSL share price at present.

Morgans gave CSL an ‘add’ rating, as well as a 12-month share price target of $315.35:

While shares have struggled of late, we continue to view CSL as a key portfolio holding and sector pick, offering double-digit recovery in earnings growth as plasma collections increase, new products get approved and influenza vaccine uptake increases around ongoing concerns about respiratory viruses, with shares trading at 25x, a substantial discount (20%) to its long-term average.

Macquarie was even more bullish. It slapped the company with an ‘outperform’ rating, alongside a share price target of $330. Going even further, Macquarie also stated that it believes CSL might even be worth $500 a share by 2027, thanks to the strength of its Behring division.

So, it seems that more than a couple of ASX experts see substantial value in CSL shares today. But let’s see what the next 12 months and beyond hold in store for this ASX 200 healthcare stock.

The post Why the CSL share price could be ‘undervalued’ at $293 appeared first on The Motley Fool Australia.

More reading

• 3 top ASX retirement shares to buy for FY25
• What’s the outlook for ASX healthcare shares in FY25?
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• Will CSL shares rise in value over the next 12 months? Here’s what the experts say
• 3 ASX shares that could create lasting generational wealth

Motley Fool contributor Sebastian Bowen has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL and Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX coal shares had a volatile year in FY24. The price of coal sank to lows of around US$115 per tonne in February, before rebounding sharply and peaking at around US$147/tonne by May.

They have since settled lower at US$132/tonne.

This hasn’t stopped investors from lifting the bid on two Aussie coal giants on Wednesday.

Whitehaven Coal Ltd (ASX: WHC) and Yancoal Australia Ltd (ASX: YAL) both touched new 52-week highs around lunchtime on Wednesday.

Whitehaven shares hit highs of $8.95 shortly after midday, while Yancoal soared to $7.18 around the same time. Both have since cooled off slightly.

Here’s a closer look at what may be behind the surge in these ASX coal shares.

ASX coal shares hitting new highs

We can likely attribute today’s rally to a combination of strong demand for coal, attractive dividends, and positive market sentiment.

Despite no market-sensitive news since May, Yancoal shares have been on an upward ascent. On 1 May, they were trading at $5.54 apiece and are now at $7.14 — a 28.3% increase.

According to my colleague Bernd, the recent forced halt in production at Anglo American‘s Grosvenor coking coal mine in Queensland due to an underground fire has also boosted investor interest.

Production is expected to be down for several months, which has created a bullish sentiment for other ASX coal shares like Yancoal.

Yancoal shares are up more than 50% over the past 12 months, outpacing the S&P/ASX 200 Index (ASX: XJO) by more than 43%.

Whitehaven Coal (ASX: WHC)

Whitehaven shares have also seen significant gains in recent weeks. The stock closed out trading in June at $7.65 per share before exploding to its yearly high on Wednesday.

It has whipsawed around 29% into the green over the past 12 months.

While the company has not released any market-sensitive news today, the rise also looks to be linked to strength in the basket of ASX coal shares, supported by strong global demand and favourable coal prices.

Global demand for coal is expected to grow, particularly from major importers like India and China. China plans to add 70 gigawatts of coal capacity this year, while India’s coal imports increased by 25% in 2023.

This robust demand could support higher coal prices and benefit Australian coal producers, which would be positive for ASX coal shares.

The company’s robust performance over the past year, along with attractive dividends, has made it a standout performer on the ASX.

Foolish takeaway

Both Whitehaven Coal and Yancoal have hit new 52-week highs as ASX coal shares catch a bid today. Even at the yearly highs, Yancoal trades at a price-to-earnings (P/E) ratio of 5, while Whitehaven has a P/E ratio of 5.50.

The post 2 ASX coal shares smashing new 52-week highs on Wednesday appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• Why Arafura Rare Earths, Ora Banda, Superloop, and Whitehaven Coal shares are rising today
• Here are the top 10 ASX 200 shares today
• The Yancoal share price just rocketed to new 52-week highs. Here’s why
• Why are ASX 200 coal shares smashing the market today?

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.

Now that we’ve entered FY25, it’s time to think about where the general direction of the market is heading. The S&P/ASX 200 Index (ASX: XJO) has drifted less than 2% into the green this year to date.

Meanwhile, AMP Ltd (ASX: AMP) shares have caught a bid this year and have held gains of 17.5%, despite trending lower since June.

The firm remains optimistic about the continued rally in share markets in FY25.

According to Dr Shane Oliver, Head of Investment Strategy and Chief Economist at AMP Investments, the past financial year saw robust returns for investors.

These were driven by falling inflation, central banks cutting rates, and better-than-expected economic conditions.

“There has been a wall of worry for investors over the last year, but as is often the case, share markets climbed it,” Oliver noted.

Here’s the outlook for ASX shares in FY25 according to the AMP economist.

AMP sees continued market optimism

AMP identifies several key themes influencing the Aussie markets going forward. Firstly, inflation has been on a downward trend globally, which has supported global market rallies. Australian inflation meanwhile has lagged, but is expected to follow trend, Oliver says.

Central bank policies are also playing a significant role. After slowing the pace of interest rate hikes, central banks worldwide – including in Europe and North America – have begun cutting rates, a trend that’s expected to continue and support market performance.

AMP, therefore, expects more volatility in stocks but believes that markets will continue to rise amid improving economic data.

As Dr Oliver explains:

Central banks in Switzerland, Sweden, Canada and the Eurozone have now started to cut with the US and UK expected to start around September…

…Our base case is that share markets can continue to rally as more central banks join in cutting rates as inflation continues to fall towards central bank targets, including the Fed from around September and the RBA from around February enabling bond yields to fall and investors to focus on stronger growth in 2025. 

Also noting:

Our base case is for more constrained returns in the current financial year of 6-7% down from the 9% or so seen over the last year. However, the risk of another correction in shares is high and investors should allow for a more volatile ride than seen over the last year.

Global economic growth is also seen to be resilient, particularly in the US. This is despite regions like Europe and Japan “flirting with recession”. Additionally, AI developments have boosted tech stocks, particularly in the US, contributing to the market’s strength.

We saw this very early in the year and then once again around the end of the first quarter when large tech and artificial intelligence (AI) shares – such as NVIDIA Corp (NASDAQ: NVDA) – reported bumper earnings.

Oliver says that despite these positive trends, geopolitical risks remain high. The war in Ukraine, tensions in the Middle East, and the upcoming elections in France and the US all pose potential threats.

Forecast for balanced growth super funds

AMP suggests balanced growth superannuation funds could also return around 6%-7% in the coming year. This is around 3 percentage points lower than the previous year.

This more conservative outlook considers the potential for market corrections and increased volatility.

Many investors hold shares like AMP in their super funds.

With short-term volatility, one might be tempted to hit the “sell” button on their brokerage accounts. Or, change investment strategy in their super.

But critically, Oliver – like all the investing greats: Buffet, Munger, Dalio, and so on – advises investors to maintain a long-term view and not be swayed by short-term market movements.

“The key is to adopt a long-term strategy and turn down the noise”, Dr Oliver said.

“Short term forecasting and market timing is fraught with difficulty and it’s best to stick to sound long term investment principles.”

The post Why AMP says share markets ‘can continue to rally’ in FY25 appeared first on The Motley Fool Australia.

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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.