The Pilbara Minerals Ltd (ASX: PLS) share price is pushing higher on Friday.

In afternoon trade, the lithium miner’s shares are up 3% to $5.47.

Why is the Pilbara Minerals share price pushing higher?

As well as getting a boost from a booming share market, the release of an announcement has given the Pilbara Minerals share price a lift this afternoon.

According to the release, the company has secured a 10-year debt facility from the Australian Government through the Export Finance Australia (EFA) and Northern Australia Infrastructure Facility (NAIF) agencies.

This debt facility will be used to support the expansion of its Pilgangoora Operation in the Pilbara region of Western Australia.

The release reveals that the EFA has approved finance of $125 million and the NAIF has agreed to provide up to $125 million in funding.

Management believes that this funding demonstrates the Australian Government’s willingness to support businesses to play a key role in supplying critical minerals that will aid the global transition towards renewable energy sources.

The facility is subject to final negotiation of terms, completion of detailed financing documents, as well as satisfaction of conditions precedent for financial close and drawdown.

Pilgangoora expansion

The expansion of the Pilgangoora operation is expected to deliver an additional 100,000tpa of spodumene concentrate production at an estimated capital cost of $103 million.

In addition, funds will be used to construct the 5Mtpa crushing and ore sorting facility. This will replace the existing contracted crushing facility and will facilitate future expansions that could ultimately deliver up to 1Mtpa of spodumene concentrate capacity across the entire Pilgangoora Operation at a capital cost of $194 million.

Pilbara Minerals CEO, Dale Henderson, commented:

We are extremely pleased to have received notice of the funding approvals from both EFA and NAIF. The continued support from the Australian Government is a significant endorsement for Pilbara Minerals, an Australian company that is a major player in the growing global lithium supply chain and demonstrates the Australian Government’s commitment to our domestic critical minerals industry.

The post Pilbara Minerals share price lifts on $250 million government loan appeared first on The Motley Fool Australia.

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More reading

• Are ASX 200 lithium shares the new recession-proof investment?
• The Pilbara Minerals share price is up 117% in 6 months. So, does JPMorgan have it wrong?
• Why did ASX lithium shares smash the market on Tuesday?
• Why did the Pilbara Minerals share price have such a cracker day?
• Here are the top 10 ASX 200 shares today  

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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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

FAANG stocks Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), Meta Platforms (NASDAQ: META), and Netflix (NASDAQ: NFLX) jumped today after the October Consumer Price Index report showed inflation cooling off faster than expected.

According to the Bureau of Labor Statistics, consumer prices jumped 7.7% year over year in October, below expectations of 7.9%, and the October reading marked the slowest year-over-year growth rates since January. On a monthly basis, inflation was up 0.4%, below expectations of 0.6%.

Core inflation, which excludes more-volatile food and energy prices, was also lower than expected, rising just 0.3% from September and 6.3% over the last year.

The news makes it more likely that the Federal Reserve will slow the pace of its interest rate hikes, leading Treasury yields to plunge while stocks rallied on the news. Rising interest rates make bonds more attractive by comparison, but falling rates tend to attract money out of bonds and into stocks. 

As of 11:20 a.m. ET on Thursday, Alphabet stock was up 7.1%, while Meta had gained 7.2%, and Netflix was 5.6% higher. At the same time, the Nasdaq had jumped 5.8%, and the 10-year Treasury yield fell 7.5% to 3.85%, its lowest point in a month. 

So what

All three of these FAANG stocks are sensitive to consumer spending and, therefore, inflation and interest rates. They also make much of their money from outside the U.S., and falling Treasury yields weakened the dollar, which fell 2% against a basket of currencies this morning.

Alphabet stock has dropped sharply over the past year on concerns over a slowing economy and possible recession. The business’ performance has taken a hit from macroeconomic headwinds, with revenue growth slowing to just 6% in its third quarter, or 11% in constant currency.

Advertising is a cyclical business, and it’s generally one of the first expenses that businesses pull back on when they sense that demand is slowing or they need to cut costs. With inflation falling faster than expected, the bottom of the economic cycle could arrive sooner than investors had thought, which would be good news for Alphabet’s Google since it’s the leading digital advertising business.

Facebook parent Meta Platforms has faced similar headwinds, with its revenue shrinking in its most recent quarter. The company noted macroeconomic challenges in its most recent earnings report, but competition from TikTok, as well as Apple’s ad-targeting restrictions, are also impacting its growth.

In a clear sign of the challenges the company faces, yesterday it laid off 11,000 employees, or 13% of its workforce. Meta has also been spending aggressively on its metaverse project, and investors might be more permissive of that spending if they believe interest rates will soon peak, since the cost of losing that money, measured by the net present value, goes up as interest rates increase.

Lastly, Netflix is a consumer-driven business whose subscription model makes it less sensitive to the macro-level economy than consumer discretionary companies that depend on one-time purchases, like restaurants and travel busineses. However, competition has increased significantly in video streaming, and higher prices are likely to cause some consumers to reconsider their streaming budget.

Netflix also has $14 billion in debt, some of which it’s likely to roll over in the coming years, so lower interest rates are to its advantage there. It’s also launching its advertising tier this month, and a recession could hurt momentum in that new business.

Now what

Of the three of these stocks, Alphabet seems the most sensitive to the macro climate as the digital advertising leader, and its performance — especially for Google Search — is something of a bellwether for the overall economy.

Meta is currently struggling with cash burn from its metaverse project and competition in its ad business. But the stock has become so cheap that a shift in market sentiment would give it some much-needed momentum to recover. 

And Netflix’s future will mostly be determined by the success of its new ad tier and its ability to win against a wide range of streaming options. But the stock would still be better off if the global economy can avoid a recession.

All three stocks should benefit if inflation continues to cool off, but Meta and Netflix face more-immediate challenges that investors will be watching closely.

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

The post Why FAANG stocks were soaring today appeared first on The Motley Fool Australia.

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More reading

• Could this imply light at the end of the tunnel for Appen shares?
• Better big tech stock: Apple vs. Alphabet
• Why Meta Platforms stock (finally) gained ground Tuesday
• Does the Vanguard International Shares ETF contain ‘good’ quality companies?
• Why Alphabet’s earnings disappointment is no reason to panic

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions in Meta Platforms, Inc. and Netflix. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares), Alphabet (C shares), Meta Platforms, Inc., and Netflix. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Meta Platforms, Inc., and Netflix. 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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The Xero Limited (ASX: XRO) share price is storming ahead today.

Xero shares are up 7% and are currently trading at $69.48. For perspective, the S&P/ASX 200 Index (ASX: XJO) is up 2.63% today.

Let’s take a look at what could be impacting the Xero share price.

Tech shares rally

Xero is not the only ASX tech share having a top day today. Appen Ltd (ASX: APX) shares are up 4%, while the Megaport Ltd (ASX: MP1) share price is soaring nearly 10%.

ASX tech shares including Xero are following in the footsteps of US counterparts. The NASDAQ-100 Index (NASDAQ: NDX) added $700 billion in value overnight amid US inflation dropping, Bloomberg reported.

The tech-heavy Nasdaq-100 Index soared 7.49% overnight.

Meanwhile, Goldman Sachs has retained a buy rating on the Xero share price with a price target of $115. This implies an upside of nearly 66% based on the share price at the time of writing. Goldman is optimistic about the company’s revenue outlook, especially the average revenue per user (ARPU). Analysts said:

This momentum is continuing, with exit ARPUs in both ANZ & International well above blended ARPU during the half (despite. c.NZ$10mn of Xerocon revenues).

This suggests a strong revenue trajectory into 2H23, aided by further price rises (NA in Nov, Partner in Mar) ongoing transaction growth, partly offset by spot FX.

Today’s positive day for Xero follows the share price sliding 11% yesterday on the back of financial results and the CEO’s departure. Xero’s EBITDA lifted 11% to NZ$108.6 million, however, this was below consensus estimates, my Foolish colleague James reported.

Xero share price snapshot

The Xero share price has fallen nearly 50% in the past year and 51% in the year to date.

For perspective, the ASX 200 has shed 7% in the past year.

Xero has a market capitalisation of more than $10.4 billion based on the current share price.

The post Why are Xero shares rebounding 8% today? appeared first on The Motley Fool Australia.

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More reading

• Move over ASX dividend share traps, a new investing pitfall could now be luring profit seekers
• ASX 200 tech shares jump 6%
• Xero share price could rise almost 80%: Goldman Sachs
• 5 things to watch on the ASX 200 on Friday
• Amidst the ongoing tech stock wreck, value shares are everywhere. There’s just one catch…

Motley Fool contributor Monica O’Shea 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 Appen Ltd, MEGAPORT FPO, and Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool Australia has recommended MEGAPORT FPO. 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 Appen Ltd (ASX: APX) share price is heading in the right direction at last.

On Friday afternoon, the artificial intelligence data services company’s shares are up 5% to $2.55.

However, that doesn’t hide the fact that the struggling tech company’s shares are down 77% year to date prior to today.

Why is the Appen share price rebounding?

Investors have been buying Appen’s shares today following a huge rebound in the tech sector which has seen the S&P/ASX All Technology Index rise an impressive 5.7%.

This has been driven by an incredible night of trade on Wall Street after the latest US inflation data came in softer than expected. This has sparked hopes that inflation has peaked and interest rates won’t need to rise as much as first feared.

Should you invest?

While today’s gain is positive, nothing has changed fundamentally for Appen from this news. So, the same drivers that sent the Appen share price crashing to a multi-year low on Thursday are still in play.

The broker community is overwhelmingly bearish on Appen, with Morgan Stanley predicting further weakness from its shares in the future. At the end of last month, it initiated coverage on Appen with an underweight rating and $2.25 price target.

The broker has fears over rising competition in the industry from the likes of Amazon and Sagemaker. It feels their technology is more sophisticated and sees no competitive advantage in Appen’s platform.

The post Why is the Appen share price storming higher today? appeared first on The Motley Fool Australia.

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More reading

• Could this imply light at the end of the tunnel for Appen shares?
• Appen share price sinks to another multi-year low despite new recruits
• Leading fund manager names the 3 ASX stocks that drove its returns higher in October
• Why are ASX 200 tech shares getting bashed around today?
• Why is the Appen share price smashing the ASX 300 today?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Appen Ltd. 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 ASX share market is seeing a strong gain today. The S&P/ASX 200 Index (ASX: XJO) is up more than 2.5%. With all of this volatility, investors may be thinking that there are opportunities galore.

While some companies are higher today, I think it’s important to keep in mind that investors should focus on the long-term growth and profit potential of a business.

With interest rates up significantly since the start of the year, it may be unsurprising to see that some businesses are heavily focused on getting to breakeven and profitability.

I think there are at least two good reasons for that. The first is that the fall in share prices means that it’s not a favourable time to issue new shares and raise capital. Therefore, companies may need to manage their cash balances carefully.

Getting to breakeven could also be useful for businesses that want to pay down, or avoid, debt. Debt now costs a lot more with interest rates higher.

Should investors focus on ASX shares cutting costs?

It really depends on what’s being cut.

Being more efficient is a good thing. Slashing an advertising budget may help short-term profitability, but I don’t think it’s good for longer-term sales or growth.

Reducing research and development may help cut costs, but it could hurt the company in the long term if it fails to excite customers or it falls behind a competitor.

Discussing the economic situation on a NABTrade webinar, the Motley Fool’s Scott Phillips was asked which ASX tech shares come to mind when thinking about opportunities for companies to strip out costs and become highly profitable. He replied:

I don’t know about stripping out costs. I think growth remains the best path to value creation for most of these businesses. So I wouldn’t imagine a whole lot of them where just costs out are a long term answer to meaningful value creation. Doesn’t mean they can’t take some costs out of some businesses. We’ve seen Elon and Twitter — so you know, there are some businesses where we can take a whole lot of costs out…

So I think yes, some companies will make money by taking costs out. It’s probably moderate amounts of increased value. But you don’t want to take so much costs out you actually lose the growth opportunity.

I’m worried that companies are trying to be too responsive, in air quotes, to investor concerns right now of ‘I want to see profit. I don’t want to see growth anymore. Show me the profit’. I daresay most of those businesses probably would have been more profitable in 10 years’ time had they continued on the growth path, then pulling in their horns just to satisfy some freaked-out fund managers and investors who want short-term returns.

Phillips suggested that if businesses focus on short-term profit, then it would probably “come at the cost of long-term gains”.

What are some examples?

Well, I don’t have my crystal ball to know how things are going to turn out for some businesses making decisions during this period.

But, I think there are a couple of great examples of companies investing for long-term growth. For example, both Amazon.com (NASDAQ: AMZN) and Xero Limited (ASX: XRO) have prioritised putting money generated back into the business to grow further.

Not only does investing give Amazon and Xero the chance to earn returns on that investment, but it also reduces their taxes because the spending significantly reduces their taxable profit. If they weren’t investing so much, they would be much more profitable.

Amazon is now a major global power in e-commerce and cloud computing. Xero has become one of the world leaders in cloud accounting software.

But, sometimes a business doesn’t invest and it can end up being a lost opportunity. In my opinion, most of the 2010s were a missed opportunity for Telstra Group Ltd (ASX: TLS) to invest in other services, such as cybersecurity as one example. But, it seemed more focused on paying large dividends to shareholders rather than re-investing that cash.

Telstra’s profit and dividends sank after it lost control of the cable infrastructure following the sale to the NBN. But, Telstra is now investing, so hopefully that will pay off for the telco.

The post Move over ASX dividend share traps, a new investing pitfall could now be luring profit seekers appeared first on The Motley Fool Australia.

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More reading

• ASX 200 tech shares jump 6%
• Xero share price could rise almost 80%: Goldman Sachs
• 5 things to watch on the ASX 200 on Friday
• Why Amazon stock finished lower today
• Amidst the ongoing tech stock wreck, value shares are everywhere. There’s just one catch…

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 positions in and has recommended Amazon and Xero. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited and Xero. The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) is soaring to a five-month high this morning after the latest US inflation figures saw Wall Street soar overnight, and Aussie tech shares are among the market’s leaders.

The ASX 200 is currently up 2.75% at 7,155.2 points. At the same time, the S&P/ASX 200 Information Technology Index (ASX: XIJ) is up a whopping 3.99%.

Market watchers likely won’t be surprised to learn, therefore, that the Nasdaq Composite Index (NASDAQ: .IXIC) leapt 7.3% overnight.

Meanwhile, the Dow Jones Industrial Average Index (DJX: .DJI) rose 3.7% and the S&P 500 Index (SP: .INX) soared 5.5%.

Their gains followed news the US consumer price index lifted 0.4% in October and 7.7% over the last 12 months. That was a softer result than broadly expected and could lead the US Federal Reserve to put the brakes on interest rate hikes.

So, which ASX 200 tech shares are making the most of Friday’s surge? Keep reading to find out.

3 ASX 200 tech shares leaping 10% on Friday

It’s a good day for many of the market’s favourite ASX 200 tech stocks, with the WiseTech Global Ltd (ASX: WTC) share price among those leading the way.

The logistics software provider’s stock has gained 11.29% at the time of writing, soaring to trade at $58.34.

The Block Inc (ASX: SQ2) share price is also posting a notable surge on Friday. Though, the company’s Aussie listing hasn’t quite left the gates with the same gusto as its New York-listed counterpart.

The Block share price is up 11.62% on the ASX right now, trading at $101.99. That marks a near-four week high. However, over on Wall Street, the Block Inc (NYSE: SQ) share price rocketed 17.8% overnight to close Thursday’s session at US$67.40.

Finally, the Megaport Ltd (ASX: MP1) share price is making the most of today’s excitement. It’s lifting 9.67% right now, trading at $5.90.

The post 3 ASX 200 tech shares booming 10% or more on Friday appeared first on The Motley Fool Australia.

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More reading

• ASX 200 tech shares jump 6%
• Why Block, Lake Resources, Pendal, and Xero shares are dropping today
• Why is the Block share price plunging 6% today?
• Top brokers name 3 ASX shares to buy today
• Here are the top 10 ASX 200 shares 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 positions in and has recommended Block, Inc., MEGAPORT FPO, and WiseTech Global. The Motley Fool Australia has positions in and has recommended Block, Inc. and WiseTech Global. The Motley Fool Australia has recommended MEGAPORT FPO. 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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If you’re looking for an easy way to invest your hard-earned money, then exchange traded funds (ETFs) could be the way to do it.

But which ETFs might be top options right now? Listed below are three quality ETFs that could be worth considering:

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

The first ETF to look at is the BetaShares Asia Technology Tigers ETF. This higher risk ETF gives investors exposure to the best tech stocks in the Asian market. This means you’ll be buying well-known companies such as ecommerce giant Alibaba, search engine company Baidu, and WeChat owner Tencent.

BetaShares highlights that the technology sector is underrepresented in the Australian share market and may also provide a complement for investors with exposure to U.S. based technology companies. However, it is worth noting that regulatory concerns in China have been weighing on the shares in the fund and could continue doing so in the future.

VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)

Another ETF that could be a quality option is the VanEck Vectors Morningstar Wide Moat ETF. When Warren Buffett looks for an investment, he has a preference for companies with sustainable competitive advantages or moats. This means that if you want to invest like Buffett, then this ETF would be an easy way to replicate his strategy.

The ETF currently contains approximately 50 attractively priced companies with sustainable competitive advantages. These include the likes of Alphabet, Boeing, Kellogg Co, Meta Platforms, and Walt Disney.

VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)

A final ETF for ASX investors to look at is the VanEck Vectors Video Gaming and eSports ETF. This ETF gives investors easy access to a global video game market estimated to comprise 2.7 billion active gamers.

And with spending in the market expected to continue to grow strongly in the coming years, the companies included in this fund appear well-placed to benefit. This includes game developers such as Electronic Arts, Nintendo, Nvidia, Roblox, and Take-Two.

The post 3 quality ETFs for ASX investors to buy this month appeared first on The Motley Fool Australia.

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More reading

• 3 ETFs for ASX investors to buy right now
• 2 of the best ETFs for ASX investors to buy next week
• I think these 2 ASX ETFs are unmissable buys in this sell-off
• 2 high quality ETFs for ASX investors in November
• Here are 3 ASX ETFs for smart investors

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BetaShares Asia Technology Tigers ETF, VanEck Vectors ETF Trust – VanEck Vectors Video Gaming and eSports ETF, and VanEck Vectors Morningstar Wide Moat ETF. 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 Novonix Ltd (ASX: NVX) share price has been a strong performer on Friday morning.

At the time of writing, the batter materials and technology company’s shares are up 10% to $2.62.

Why is the Novonix share price charging higher?

Investors have been scrambling to buy Novonix shares on Friday after Wall Street had its best night in over two years.

Investors were pouring back into the market after the latest US inflation reading came in softer than expected. According to CNBC, October’s US consumer price index rose 0.4% for the month and 7.7% from this time last year.

This compares to the market’s expectation for increases of 0.6% and 7.9%, respectively.

As a result of this reading, investors appear to be betting that inflation has now peaked and the US Federal Reserve will not have to increase rates as much as feared to tame the beast.

It isn’t just Novonix that is rising today in the battery materials industry. Here’s a summary of how some battery materials shares are performing:

• Allkem Ltd (ASX: AKE) share price is up 5%
• Core Lithium Ltd (ASX: CXO) share price has risen 4.5%
• Piedmont Lithium Inc (ASX: PLL) share price has climbed 3.5%
• Sayona Mining Ltd (ASX: SYA) share price is up 5%

Can Novonix keep rising?

The team at Morgans believes that the Novonix share price can keep rising from here.

Its analysts currently have a speculative buy rating and $3.11 price target on its shares.

This implies potential upside of almost 19% over the next 12 months even after today’s solid gains.

The post Why is the Novonix share price surging 10% on Friday? appeared first on The Motley Fool Australia.

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More reading

• What’s boosting the Novonix share price on Wednesday?
• Why are Novonix shares listed on the Nasdaq as well as the ASX?
• Why did the Novonix share price jump 50% in October?
• Why is the Novonix share price gaining today?
• Why is the Novonix share price tanking 5% today?

Motley Fool contributor James Mickleboro has positions in Allkem 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 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.

The stock market has gotten hit hard throughout 2022, and inflation has played a big role in the bear market. The Nasdaq Composite (NASDAQINDEX: ^IXIC) has been hit the hardest out of major market benchmarks, and many high-growth stocks have lost huge portions of their value over the course of the year.

Yet all that seemed to be a thing of the past on Thursday, as the Nasdaq jumped more than 6% at midday. The move higher came after the latest reading on the Consumer Price Index (CPI) indicated a slowdown in price increases over the past year. Yet when you look more closely at the actual inflation numbers, it’s far from clear that investors should consider the problem solved.

What investors focused on

The CPI report released this morning showed that the index rose 0.4% on a seasonally adjusted basis during the month of October compared to September’s level. With that move, the CPI has risen 7.7% over the past 12 months. As high as that is, it marks the lowest year-over-year increase since January 2022, and it was lower than the 7.9% year-over-year figure that most economists had expected to see.

As we’ve seen numerous times before, food and energy prices were volatile and contributed to inflationary pressures. Energy in particular reversed its recent losses, rising 1.8% on a nearly 20% jump in the cost of heating oil and a 4% rise in gasoline prices. Food prices rose 0.6% on a 0.9% rise in costs for food away from the home.    

Excluding those food and energy numbers, core inflation rose 0.3% for the month and 6.3% year over year. Used vehicles and apparel costs continued their monthly decline, and healthcare costs also fell. Continued increases in shelter costs and transportation services kept the inflation rate higher than investors had wanted to see.

Do these numbers warrant a Fed pivot?

It was far from clear in light of the CPI report whether investors would see it as a reason for the Federal Reserve to pivot from its current policy trajectory with respect to interest rates. Admittedly, 7.7% is down from peak year-over-year figures above 9% from earlier this year. However, it remains stubbornly far above the 2% target that the central bank has historically maintained.

Yet market participants seemed to use comments from a pair of Federal Reserve officials as an excuse to start a massive stock rally. Philadelphia Fed President Patrick Harker expressed his view that the central bank would likely slow the pace of further increases in interest rates once they become adequately restrictive on economic growth. Similarly, Dallas Fed President Lorie Logan expressed relief at the downward move in the year-over-year CPI, but indicated that there was still a long path ahead for inflation to weaken further before central bankers can treat price pressures as having been defeated.

Moreover, investors recognized that the Fed will actually get another data point on inflation before it has to make its next decision on interest rates. Because Fed meetings come at roughly six-week intervals, the CPI figures for November will be available before the next potential hike. If next month’s CPI confirms what this month’s figures said, then it would be more powerful evidence for the central bank at least to consider making smaller increases in interest rates than the three-quarter-percentage-point hikes it has used four times in a row now.

Hope for the best

The extent of the move higher in the Nasdaq shows just how worried investors have been about inflationary pressures. A one-day pop in stocks, though, won’t in itself be a victory over inflation. Future data will have to support a positive trend in order for the markets to build on Thursday’s gains. 

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

The post Why the Nasdaq is soaring even as inflation remains high appeared first on The Motley Fool Australia.

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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.

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

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The Fortescue Metals Group Limited (ASX: FMG) share price has dropped 12% in the last six months and almost 20% in the five months since 10 June.

Considering the ASX iron ore share has a market capitalisation of more than $50 billion (according to the ASX), the abovementioned declines represent a significant fall in dollar terms.

However, I’m unfazed by what has happened with Fortescue shares so far this year.

As an iron ore miner, it’s perhaps unsurprising that the Fortescue share price would drop, considering the iron ore price has also gone backwards.

But, I believe several things could mean that it still has a very promising future.

Green energy plans continue

The key reason why I decided to invest in Fortescue shares was because of its global efforts to decarbonise heavy industrial sectors by producing large quantities of green hydrogen and green ammonia.

Fortescue Future Industries (FFI) can revolutionise the global energy market by producing green energy powered by renewable energy. It has plans to produce 15 million tonnes of green hydrogen annually by 2030 with a global portfolio of production facilities. It will look to keep growing production in the 2040s.

International energy company E.ON has agreed to buy up to 5 million tonnes of this production (a third), along with other, smaller deals.

The first location where green hydrogen and green ammonia could be produced is the Incitec Pivot Ltd (ASX: IPL) Gibson Island ammonia facility. Fortescue and Incitec are progressing with plans. They have started front-end engineering design and executed a framework agreement to govern the project through to a final investment decision.

Fortescue Future Industries continues to grow its number of agreements with different countries that could result in future production facilities being built there. As time goes on, I think this will help support and boost the Fortescue share price.

In the lead-up to Egypt hosting the 2022 United Nations Climate Change Conference (COP27), FFI signed an agreement to conduct studies to develop green hydrogen production in Egypt.

Higher energy prices are also a potential bonus for the business. The more green hydrogen that can be produced, the cheaper the cost will be for clients. With other forms of energy currently at a high cost, it could make green hydrogen more palatable to switch to.

Chinese economic rebound

There is growing talk that China may change to a reopening strategy at some point.

My colleague James Mickleboro reported:

Goldman Sachs’ economist Hui Shan believes that the reopening of China is still some way off as “the government still needs to keep its zero-COVID policy until all preparations are done.” Goldman expects a reopening in the second quarter of next year.

If and when that happens, it would hopefully be a big boost for the Chinese economy, increase steel demand, and potentially lead to a higher iron ore price. As one of Australia’s largest iron ore miners, this would be positive for Fortescue shares.

It’s hard to know how much of a boost that would be, but it’s entirely possible that China could decide to build more infrastructure, which would likely need a lot of steel.

Dividends to keep flowing

Fortescue’s dividend payments depend heavily on how much profit and cash flow it can make. This requires a solid iron ore price to generate good profits.

But, with Fortescue’s C1 costs sitting at US$17.69 per wet metric tonne (in the three months to September 2022), there is still plenty of margin for the iron ore miner to make enough profit to pay good dividends, providing a good boost to the total shareholder return statistic.

According to CMC Markets, it’s predicted to pay an annual dividend of $1.42 in FY23 and $1.02 in FY24. This translates into forward grossed-up dividend yields of 12% in FY23 and 8.7% in FY24 at the current Fortescue share price.

For me, these dividends alone would be good returns, so I’m happy to hold for dividends in the short term, and green energy is promising for the long term.

The post 3 reasons I’m still bullish on Fortescue shares appeared first on The Motley Fool Australia.

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More reading

• Amidst the ongoing tech stock wreck, value shares are everywhere. There’s just one catch…
• China’s property crash has decimated the iron ore price. So what’s the outlook for Rio Tinto shares?
• The Fortescue share price has leapt 17% in November. Here’s why it may not last
• Why is the Fortescue share price bolting out of the gate on Wednesday?
• Why is the Fortescue share price firing up 4% today?

Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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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