The Sayona Mining Ltd (ASX: SYA) share price is falling today.

Shares of the lithium producer are currently trading for 24.3 cents each, a drop of 1.22% on Wednesday’s closing price.

The materials sector is also struggling today and is currently one of the worst-performing sectors in afternoon trade on Thursday. The S&P/ASX 200 Materials Index (ASX: XMJ) is down 0.98%, while the S&P/ASX 200 Index (ASX: XJO) is falling 0.31%.

However, despite today’s fall, Sayona shares are up 75% this year to date. So is it time to cash in? Let’s cover the highlights of where the Sayona Mining share price could be heading.

What’s going on with Sayona?

Sayona Mining’s rating was downgraded by bank Clarksons Platou this afternoon. The company changed its position on the share recently by rating it as a ‘new sell’.

At face value, it might be hard to imagine why some experts believe its shares could be in for a downturn. The company has posted consistently positive developments in its fundamentals in the recent past, and its outlook for FY23 remains positive.

One thesis that my Fool colleague James posted in October is that investors could be taking this opportunity to take profits in their investments.

Then there’s the outlook for lithium prices in China. S&P Global predicts that lithium carbonate and hydroxide prices will continue their bull run to the end of the year, with some estimates stating prices will exceed Yuan 600,000/mt by January 2023. 

However, the company also notes that production is expected to slow down during the quiet winter period, which could be a factor that’s being priced into some lithium shares.

This might explain why some shares like Sayona have been shorted by bears. The company recently made the list of the top ten most-shorted ASX shares with a short interest ratio of 8.9% at the time of writing.

Sayona Mining share price snapshot

The Sayona Mining share price is up 75% year to date and 60% over the past year. That’s beating the ASX 200 by a huge margin — it’s down 8% and 6% over the same timeframes.

The company’s market capitalisation is around $2.03 billion.

The post Up 75% in 2022, is it time to cash in on Sayona Mining shares? appeared first on The Motley Fool Australia.

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More reading

• Are ASX 200 lithium shares the new recession-proof investment?
• Why has the Sayona Mining share price dumped 33% in 2 months?
• Why did ASX lithium shares smash the market on Tuesday?
• Here are the 10 most shorted ASX shares
• How did the Sayona Mining share price perform in October?

Motley Fool contributor Matthew Farley 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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to end its winning streak. At the time of writing, the benchmark index is down 0.3% to 6,978 points.

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

Block Inc (ASX: SQ2)

The Block share price is down almost 7% to $89.49. This follows an even larger decline by the payments company’s NYSE listed shares overnight on Wall Street. Block wasn’t the only tech share under pressure. A number of tech stocks dropped deep into the red, leading to the tech-focused Nasdaq index sliding 2.5% last night.

Lake Resources N.L. (ASX: LKE)

The Lake Resources share price is down 3.5% to $1.07. This follows broad weakness in the lithium industry today. In addition, Lake Resources shares have come under pressure during the last couple of sessions after J Capital renewed its short attack on the lithium developer.

Pendal Group Ltd (ASX: PDL)

The Pendal share price is down over 11% to $3.89. Investors have been selling this fund manager’s shares amid concerns that Perpetual Limited (ASX: PPT) could be looking to abandon its takeover of Pendal. Perpetual, which has received an improved takeover proposal today, has sought to delay a court hearing for the scheme of arrangement.

Xero Limited (ASX: XRO)

The Xero share price has sunk 10% to $65.09. Investors have been selling this cloud accounting platform provider’s shares after its first half earnings fell short of estimates. In addition, the company announced the surprise exit of its CEO, Steve Vamos, after almost five years in the top job. In respect to its earnings, Xero reported EBITDA of NZ$108.6 million (or NZ$123.7 million excluding one-offs). This compares to the consensus estimate of NZ$143 million.

The post Why Block, Lake Resources, Pendal, and Xero shares are dropping today appeared first on The Motley Fool Australia.

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More reading

• Why is the Block share price plunging 6% today?
• Perpetual share price leaps on boosted takeover bid
• Xero share price sinks 7% on half-year earnings miss and CEO exit
• 5 things to watch on the ASX 200 on Thursday
• Top brokers name 3 ASX shares to buy 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 Block, Inc. and Xero. The Motley Fool Australia has positions in and has recommended Block, Inc. and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Rio Tinto Limited (ASX: RIO) share price is down 0.72% today to $97.92 as fears of further trouble in China’s property market create concern about the outlook for iron ore.

Fellow ASX mining shares are also falling today. The Fortescue Metals Group Limited (ASX: FMG) share price is down 2.04% to $16.77. The BHP Group Ltd (ASX: BHP) share price is down 1.26% to $40.66.

There is no news from Rio today. However, ongoing discussion about China’s slowing economy is likely weighing on the Rio Tinto share price.

According to reporting in the Australian Financial Review (AFR) today, Reserve Bank deputy governor Michele Bullock says China’s stressed property market and COVID-zero policy are among their top concerns for the Australian economy.

China’s property market is floundering, which means reduced new construction. On top of that, its COVID-zero policy means lockdowns have and may continue to disrupt industrial activity. The direct result of these two factors is less demand from Australia’s biggest iron ore customer.

‘Steepest downturn in years’ for China’s property sector

Lesser demand from China has led to a fall in the iron ore price. It has almost halved from its 52-week peak of about $160 per tonne in March. Today, it’s fetching US$91.50 per tonne, up 0.55% overnight.

That’s a long way off its all-time record high of about US$240 per tonne back in May 2021.

According to reporting on abc.net.au today, UBS resources analyst Lachlan Shaw said:

We’re seeing the steepest downturn in property activity in China, in years, arguably decades, as the industry there struggles with liquidity and policy from the government.

The combination of developer funding challenges and lack of demand is seeing property purchases in China very, very weak.

That’s been traditionally, for the last decade or two, probably a third or more of China’s steel demand, and therefore over a sixth of global steel demand.

According to Trading Economics, investment in China’s “debt-ridden” property market has fallen by more than 8% year over year. In October, lower steel demand drove iron ore imports down by 4.7%.

Head of research for MCA Michael Slack is also concerned that supply is about to increase. All the major miners in Australia have built, or are building, new iron ore mines.

Slack writes on Livewire:

Looking forward, we see growth in iron ore supply, particularly out of Australia, Brazil and Africa, exceeding growth in Chinese demand thereby pushing the iron ore market into surplus and impacting price.

If China continues along this path and allows the property sector to wallow, iron ore pricing and resource companies may suffer along with it.

Because of this demand overhang and its potential impact on resources stocks, we currently hold an underweight exposure to iron ore in our value equity strategy. 

‘Long-term future for iron ore is strong’: Rio Tinto boss

Rio Tinto’s iron ore CEO, Simon Trott, says all this talk is about the relative short-term future.

Trott told the ABC:

We are seeing some short-term weakness, particularly with inflation and interest rates rising in the Western world, and those events, combined with some impact from COVID lockdowns on the property sector in China, and so we have seen a pullback in iron ore prices of late.

But the long-term future for the iron ore business is strong, the world continues to need steel and will continue to need steel for the lives people want to live as well as future decarbonisation.

The investment decisions we make are based on our view over decades, so our long term belief in the iron ore market is unchanged.

It’s worth remembering that while daily fluctuations in the iron ore price do directly impact ASX iron ore shares, Rio is a diversified miner. This means the business doesn’t hinge solely on the iron ore outlook.

Iron ore represented 66% of Rio Tinto’s underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) for the six months to 30 June 2022.

The company also mines aluminium, copper, and other minerals including diamonds and titanium.

Rio Tinto share price snapshot

The Rio Tinto share price is down 4% in the year to date. Over the past 12 months, it’s up 13%.

Compare that to iron ore pure-play miner, Fortescue.

The Fortescue share price is down 15% in the year to date and up 17% over the past months.

The post China’s property crash has decimated the iron ore price. So what’s the outlook for Rio Tinto shares? appeared first on The Motley Fool Australia.

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More reading

• Own BHP shares? Here are key takeaways from the miner’s AGM
• 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?
• These 10 predictions could help you profit from the stock market regardless of inflation, interest rates or even another bear market
• Here’s the BHP dividend forecast through to 2027

Motley Fool contributor Bronwyn Allen has positions in BHP Billiton Limited and 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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The CSL Limited (ASX: CSL) share price is outperforming the S&P/ASX 200 Index (ASX: XJO) today. CSL shares are up 1.35% to $283.39 apiece while the ASX 200 is down 0.4%.

The market is a mixed bag today with some sectors up and some down.

The S&P/ASX 200 Health Care Index (ASX: XHJ) is up 1.41%, making it the second-best performing sector of the day so far. It ranks behind S&P/ASX 200 Utilities (ASX: XUJ), which is having a screamer — up 14%.

COVID-19 disrupts trajectory of CSL share price

The CSL share price was on an incredible upward trajectory before COVID-19 hit in February 2020.

This time five years ago, the CSL share price was $144. It rose to a peak of $342.75 on 20 February. That’s a 138% gain in 27 months. Oh, yes. That’s a stratospheric growth for a company the size of CSL.

Then the world caved in over COVID-19 and it’s been a very bumpy ride for CSL shares ever since.

Is it time to buy this ASX market darling?

A bunch of brokers are now feeling very positive about the CSL share price, and the future of the company.

Today, The Australian reports that Credit Suisse has raised its rating on CSL shares to outperform.

The broker isn’t alone in its optimistic outlook.

As my Fool colleague Tristan reported yesterday, Morgans has an add rating on CSL with a 12-month share price target of $312.50.

Morgan Stanley has an overweight rating on CSL with a price target of $327. Ord Minnett has a price target of $330. Citi goes a couple of steps further with a 12-month share price target of $340.

My Fool colleague Tony also reports that 15 out of 18 analysts on CMC Markets rate CSL a buy.

Fairmont Equities managing director Michael Gable told The Bull this week:

The share price of this blood products company has been relatively flat in the past two years. Because CSL is a growth stock, interest rate rises have kept a lid on the share price.

But with interest rate rises poised to slow or even cease in the new year, Gable feels like CSL shares have a fighting chance to return to glory.

The recent acquisition of Vifor Pharma should add to CSL’s earnings next year, and a topping out in interest rates should also assist a share price recovery.

The post Why is the CSL share price smashing the ASX 200 on Thursday? appeared first on The Motley Fool Australia.

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• Are CSL shares a good buy right now?
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• Leading brokers name 3 ASX shares to buy today
• Own CSL shares? Here’s what brokers are saying about its R&D pipeline
• Why I’m seriously considering investing $10,000 in these ASX 200 shares

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Bronwyn Allen has positions in CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL 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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BHP Group Ltd (ASX: BHP) shares are dropping on the day of the mining giant’s annual general meeting (AGM).

In afternoon trade, the Big Australian’s shares are down over 1.5% to $40.52.

This follows a decline by BHP’s NYSE listed shares overnight, which appears to have offset any positives from its AGM presentation.

What was said at the BHP AGM?

While there wasn’t anything market sensitive in the AGM presentation, management spoke very positively about the future. Particularly given the changes it has made to its portfolio. BHP CEO Mike Henry commented:

We have made significant changes this year to reshape our business with a portfolio more aligned to the global megatrends unfolding around us, so we are better positioned to grow value as demand for our commodities grows.

One commodity the mining giant is very positive on is potash. While BHP isn’t yet mining the mineral, it has big plans to do so from the Jansen Potash Project. This is expected to be one of the world’s largest and lowest cost potash mines when it comes into production.

BHP chair, Ken MacKenzie, sees the mineral, which is a vital link in the global food supply chain, as a big part of the miner’s future. He said:

Potash is a new commodity for BHP which has the potential to deliver value for a century or more.

MacKenzie also highlights that BHP’s portfolio is positioned to benefit from several megatrends. He added:

The changes we have made across BHP align your company with the megatrends of decarbonisation, population growth, and demand for higher standards of living. According to our modelling, to deliver our Paris-aligned 1.5-degree scenario, the demand for copper, nickel and steel will grow to enable the infrastructure and products required for the energy transition.

This was echoed by Mike Henry, who concluded his speech saying:

We are confident the fundamentals of decarbonisation, population growth, rising living standards and urbanisation will drive demand for the commodities in our reshaped portfolio for decades into the future. BHP will continue to provide the commodities the world needs and deliver value for our stakeholders. With your support, we will help build a better future.

The post Own BHP shares? Here are key takeaways from the miner’s AGM appeared first on The Motley Fool Australia.

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• These 10 predictions could help you profit from the stock market regardless of inflation, interest rates or even another bear market
• Here’s the BHP dividend forecast through to 2027
• Why Arafura Rare Earths, BHP, Capricorn Metals, and Newcrest shares are rising today
• Why are ASX 200 mining shares bolting out the gates on Monday?
• Why is the BHP share price charging 4% higher?

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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It’s been a brilliant year so far for S&P/ASX 200 Index (ASX: XJO) lithium shares despite growing talk of global recessions.

Could companies dealing in the battery-making material be among those capable of dodging major downturn carnage? Plenty of experts appear to think so.

Indeed, Macquarie reportedly upgraded its outlook for lithium prices earlier this week despite Treasurer Jim Chalmers’ prediction of recessions around the globe.

Though, Chalmers remains confident Australia will avoid much of that which many of its trading partners cannot, telling ABC’s Q+A last week:

When the global economy turns down … we can’t completely escape the consequences of that but … I don’t expect us to go into recession.

Indeed, the ASX 200 has outperformed many of its global peers, falling just 8% year to date.

Comparatively, the Dow Jones Industrial Average Index (DJX: .DJI), S&P 500 Index (SP: .INX), and Nasdaq Composite Index (NASDAQ: .IXIC) all entered bear markets in 2022.

So, how have ASX 200 lithium shares performed amid the market downturn and could they represent a recession hedge? Let’s take a look.

ASX 200 lithium shares outperform through 2022’s downturn

Most ASX 200 lithium shares have outperformed the market significantly this year, shaking off the broader downturn to rocket higher.

The star performer has been Core Lithium Ltd (ASX: CXO). Its stock has soared nearly 150% year to date.

Meanwhile, shares in the newly profitable Pilbara Minerals Ltd (ASX: PLS) have lifted over 50% and those in ASX 200 newbie Sayona Mining Ltd (ASX: SYA) have gained more than 75%.

Other winning market favourites include Allkem Ltd (ASX: AKE and Mineral Resources Limited (ASX: MIN), both up 40%, and Liontown Resources Limited (ASX: LTR), up 10%.

It’s safe to say the sector as a whole has defied recession talk so far.

Lithium prices have also defied a slowing Chinese economy. That’s no mean feat, as the nation generally drives demand for major commodities.

What’s next?

Many experts remain bullish on lithium prices despite the potential for a global slowdown.

My Fool colleague Bronwyn reports that Wilsons’ Rob Crookston recently voiced that the energy transition will drive demand for electric vehicles, and the lithium needed for their batteries is sky high in coming years.

Meanwhile, Macquarie upped its predictions for the spodumene price’s peak to US$6,500 a tonne this week, the Australian Financial Review reports. Though, Morgan Stanley is said to expect spot prices to slip amid pressures on demand and rising supply.

Finally, the Federal Government recently tipped lithium prices to peak next year, with spodumene expected to reach US$3,280 a tonne before easing in 2024.

No doubt such commodity prices, if realised, could help bolster many ASX 200 lithium shares through probable international recessions and an Aussie downturn.

The post Are ASX 200 lithium shares the new recession-proof investment? appeared first on The Motley Fool Australia.

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More reading

• The Pilbara Minerals share price is up 117% in 6 months. So, does JPMorgan have it wrong?
• 3 ASX All Ordinaries shares that hit multi-year highs today
• Why has the Sayona Mining share price dumped 33% in 2 months?
• Why did ASX lithium shares smash the market on Tuesday?
• Why did the Pilbara Minerals share price have such a cracker day?

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

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The S&P/ASX 200 Index (ASX: XJO) is struggling to find its feet on Thursday.

At the time of writing, the benchmark index has slumped 0.3% to 6,981 points.

But despite this weakness, some ASX 200 shares are bucking the trend and racing higher. Let’s take a look.

Origin Energy Ltd (ASX: ORG)

Today’s biggest ASX news story is Origin’s takeover bid from Brookfield Asset Management. If that name sounds familiar, it’s likely because Brookfield made a widely-publicised play for AGL Energy Limited (ASX: AGL) that ultimately fell through. 

Today’s move has seen the Origin share price catapult 36.3% higher to currently sit at $7.92.

Brookfield has tabled an indicative non-binding proposal to acquire Origin for $9 cash per share. This indicative proposal values Origin at an enterprise value of $18.4 billion.

What’s more, Origin revealed today that this isn’t the first offer from Brookfield. On 8 August, the consortium made an indicative proposal at an offer price of $7.95 cash per share. 

Then, on 18 September, the consortium made a further proposal at an indicative price of between $8.70 to $8.90.

This time, Origin has entered into a confidentiality and exclusivity agreement with the consortium. 

The company notes that following due diligence, if the consortium makes a binding offer at $9 cash per share, the board intends to unanimously recommend shareholders vote in favour of the proposal.

With Origin shares last changing hands at $7.92 apiece, there is currently 13.6% upside on the table if the deal goes through.

It’s worth noting that if the scheme of arrangement is implemented after 15 May 2023, the takeover price will decrease by $0.03 per month. 

News Corporation (ASX: NWS)

The News Corp share price is also having a day in the sun. The dual-listed media and publishing company released its first-quarter results yesterday, which was met with disappointment from the market. The News Corp share price finished the day 10.9% lower. 

But there appears to be a change in sentiment today, with News Corp shares rebounding by 9.29% at the time of writing to sit at $25.18.

In the first quarter of FY23, News Corp delivered sales of US$2.48 billion, down 1% year on year.

The group noted that a strong US dollar, which reduces the value of its international revenue, and lower book sales dragged on the top line.

The result was dire on the bottom line, with net income tumbling by 75% to US$66 million.

During yesterday’s earnings call, CFO Susan Panuccio painted a cautious outlook for the coming quarter:

We continue to expect higher costs due to supply chain and inflationary pressures. Advertising conditions and mix and visibility remains limited across the businesses.

Computershare Limited (ASX: CPU)

Computershare is another ASX 200 share racing higher today. The Computershare share price gained as much as 9% in early morning trade. But shares have since taken a breather. At the time of writing, Computershare shares have climbed 4.81% to $27.25.

This upward swing has been driven by a guidance upgrade at the company’s annual general meeting (AGM) today.

Computershare revealed that in the first four months of FY23, global interest rate rises have been faster and larger than expected. 

Computershare is a beneficiary of rising interest rates because it generates margin income on the cash balances it holds on behalf of clients. 

The company is now expecting to generate US$800 million of margin income in FY23; up from the US$520 million figure that was guided in August.

As a result, the company has also upgraded its FY23 guidance for management earnings per share (EPS). Back in August, the company expected management EPS to grow by around 55% in FY23. It’s now expecting growth to be around 90%.

In FY22, Computershare delivered management EPS of 57.95 US cents. So, a 90% increase would result in management EPS of roughly US$1.10. This would see Computershare generating normalised profit of around US$660 million in FY23.

The post 3 ASX 200 shares shooting the lights out on Thursday appeared first on The Motley Fool Australia.

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More reading

• Why are CBA shares so high right now?
• AGL shares left at the alter amid Origin’s new proposal
• Why is the Origin share price rocketing 40%?
• Worried about your income in retirement? Take a look at these 3 ASX 200 dividend shares
• ASX 200 bank shares: Buy, hold, or fold?

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

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The Woodside Energy Group Ltd (ASX: WDS) share price is out of form on Thursday.

In afternoon trade, the energy producer’s shares are down 2% to $38.11.

Why is the Woodside share price dropping today?

The Woodside share price is falling today after oil prices tumbled overnight.

According to Bloomberg, the WTI crude oil price was down 3.1% to US$86.18 a barrel and the Brent crude oil price was down 2.5% to US$92.99 a barrel.

Oil prices have continued to slide during Asian trade, with the WTI crude oil price now fetching US$85.65 a barrel and the Brent crude oil price trading at US$92.49 a barrel.

Traders were selling down oil following an increase in US crude stockpiles. According to CNBC, industry data showed that U.S. crude stockpiles rose by 5.6 million barrels for the week ended 4 November. This was significantly more than the 1.4 million barrels the market was expecting.

In addition, a rebound in COVID-19 cases in top importer China has caused concerns that fuel demand could soften.

Stephen Innes, managing partner at SPI Asset Management, commented:

With that (China reopening) narrative getting pushed back, coupled with a considerable build on U.S. inventory data, implying dimming U.S. demand, the recessionary crews are back out in full force this morning in Asia.

It isn’t just the Woodside share price that is falling today. The Beach Energy Ltd (ASX: BPT) share price is down 2.5% and the Santos Ltd (ASX: STO) share price is down almost 1%.

This has led to the S&P/ASX 200 Energy index falling 1.8%, making it the worst performing area of the Australian share market on Thursday.

The post Why is the Woodside share price being whittled away today? appeared first on The Motley Fool Australia.

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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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The Commonwealth Bank of Australia (ASX: CBA) share price has gone up by 15.5% since 3 October 2022. A strong performance by the major bank share. This compares to a rise of 8% for the S&P/ASX 200 Index (ASX: XJO).

There was a good run by a number of ASX bank shares including Australia and New Zealand Banking Group Ltd (ASX: ANZ), Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd (ASX: NAB) as well.

The banking sector has been one of the better-performing sectors in 2022. That’s despite the economic pain from elevated inflation and the damage being done to asset values by higher interest rates.

The CBA share price is up 2% this year, while plenty of others have fallen such as Wesfarmers Ltd (ASX: WES) and Woolworths Group Ltd (ASX: WOW) which are down by 23% and 13% respectively in 2022.

What could be boosting the CBA share price?

In my opinion, it’s largely down to higher interest rates. The ultra-low interest rates during the COVID-19 pandemic were not helpful for bank lending margins, shrinking their profitability.

But, with higher interests, things are now looking up. Banks are increasing their loan rates faster than what it’s passing on to savers. This is increasing their net interest margins (NIM).

Banks get a lot of funding from savings accounts and term deposits. In FY22, deposit funding was 74% according to CBA. So it satisfied a “significant portion” of its funding from retail, business and institutional customer deposits.

The boost to the interest rate could add billions to CBA’s operating profit. In ANZ’s recent FY22 result, it said that in FY23 its net interest income could benefit from higher interest rates to the tune of around $1.5 billion in FY23 and $3.2 billion in FY25. ANZ is a smaller bank than CBA, so it could add even more for Australia’s biggest bank.

But, keep in mind that in the future, the banks may suffer from increased bad debts – not every household may be able to absorb these higher interest rates.

Is the major bank good value?

Coverage by The Motley Fool’s Bruce Jackson certainly doesn’t suggest so.

Earlier this year, on 10 August – when the CBA share price was $3 lower than it is today – Jackson said that “at today’s valuation, CBA shares look downright expensive, especially given the competitive environment and economic outlook”.

Then, this week, he covered some comments made by a fund manager:

The Chester High Conviction Fund said “banks are capturing the benefit of higher interest rates, without yet feeling the impacts of those higher rates on impaired loans”.

Yet the fund views banks as “leveraged exposure to the Australian economic cycle,” effectively sounding the alarm bells for bank shares should the economy weaken. The sharp increase in interest rates will hit many mortgage-holders from next year onwards as they transition off low fixed rate mortgages.

What is the CBA share price valuation today?

According to CommSec – which doesn’t get its numbers from CBA – the CBA share price is valued at under 19x FY23’s estimated earnings.

That does look quite pricey. I prefer the look of the NAB share price, which is valued at under 13x FY23’s estimated earnings.

The post Why are CBA shares so high right now? appeared first on The Motley Fool Australia.

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

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The Block Inc (ASX: SQ2) share price is currently down 6.4% in Thursday’s trading.

The global buy now, pay later (BNPL) stock closed yesterday trading for $95.95 and is currently at $89.81.

That’s a much sharper sell-off than the 0.3% losses currently posted by the S&P/ASX 200 Index (ASX: XJO).

So, what’s going on?

Why is the ASX BNPL share tumbling?

The Block share price is under pressure today following a 2.5% overnight retreat by the tech-heavy Nasdaq Composite (NASDAQ: .IXIC).

Block, which acquired Afterpay in January this year, is dual-listed in Australia and the United States. And Block’s shares slid a painful 8.6% on the NYSE yesterday.

The pressure on the Block share price and the broader tech sector comes on several fronts.

First, there’s the big rout in crypto markets. Spurred by a liquidity crunch at global crypto exchange FTX.com, this has just seen Bitcoin (CRYPTO: BTC) tumble to two-year lows.

Second, investors are bracing for the latest inflation report out of the US. That’s due out today, overnight Aussie time.

Should inflation in the world’s economy prove resilient despite the spate of recent interest rate rises, it will most likely mean continued aggressive rate hikes from the US Federal Reserve. And fast-rising interest rates have proven to be bad news for the Block share price, and indeed every BNPL company, in 2022.

We’ll need to wait and see what those numbers are. But the jobs report released out of the US on Friday showed the nation added more jobs in October than consensus expectations, with wages rising as well.

As Citigroup economists Veronica Clark and Andrew Hollenhorst note (quoted by Bloomberg):

An upside surprise would be more likely to be driven by underlying strength and together with the resilient jobs report would further raise the risk that policy rates will need to rise higher to quell inflation.

Stay tuned.

Block share price snapshot

Since commencing trading on the ASX on 20 January, the Block share price has lost 49%. That compares to a 5% loss posted by the ASX 200 over that same period.

The post Why is the Block share price plunging 6% today? appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy today
• Here are the top 10 ASX 200 shares today  
• Here are the 10 most shorted ASX shares
• Here are the top 10 ASX 200 shares today
• Why Allkem, Block, Bowen Coking Coal, and CSR shares are racing higher

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin. The Motley Fool Australia has positions in and has recommended Bitcoin. 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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