In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to start the week with a decline. At the time of writing, the benchmark index is down 0.15% to 7,546.1 points.

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

Brainchip Holdings Ltd (ASX: BRN)

The Brainchip share price is down 3% to 64.5 cents. This follows weakness in the tech sector and news that short sellers are increasing their interest in this semiconductor company. The meme stock is now in the top ten with short interest of 6.7%. Its abject sales performance and crazy valuation appear to be the reason for this short interest.

Core Lithium Ltd (ASX: CXO)

The Core Lithium share price is down over 4% to $1.08. Once again, Goldman Sachs has reaffirmed its sell rating and 95 cents price target on this lithium developer’s shares. In other news, this morning the company announced the appointment of its new CFO, Doug Warden. He has previously held the same role with a couple of other ASX miners.

Insurance Australia Group Ltd (ASX: IAG)

The IAG share price is down over 2% to $4.63. This morning, the team at Morgans downgraded this insurance giant’s shares to a hold rating with a $5.04 price target. The broker made the move after cutting its earnings forecast materially for FY 2023 due to IAG’s half year update, which fell well short of expectations.

Nick Scali Limited (ASX: NCK)

The Nick Scali share price is down 15% to $10.53. This follows the release of the furniture retailer’s half year results this morning. Although Nick Scali reported a 70% increase in net profit after tax to $60.6 million, management was unable to provide any guidance for the full year. This may have spooked some investors.

The post Why Brainchip, Core Lithium, IAG, and Nick Scali shares are dropping today appeared first on The Motley Fool Australia.

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More reading

• IAG share price tumbles on broker downgrade
• Nick Scali share price plummets despite 70% profit boost
• Would Core Lithium shares be dirt cheap if lithium prices remain strong?
• These are the 10 most shorted ASX shares
• Top brokers name 3 ASX shares to buy next week

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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 ASX dividend share space has interesting businesses from a wide variety of sectors. While resources have gone on a strong run, I think that there are few names that could outperform.

A number of businesses have risen strongly over the last month or so, such as BHP Group Ltd (ASX: BHP) and Aristocrat Leisure Limited (ASX: ALL).

However, there are a few names that I think could continue to do well over the rest of the year.

National Australia Bank Ltd (ASX: NAB)

NAB is one of the biggest ASX bank shares and it’s my preferred major bank.

I think the ASX dividend share is doing very well at the basics under the leadership of Ross McEwan. The business is succeeding at growing profit. In the bank’s FY22 result, it grew cash earnings by 8.3% to $7.1 billion and the full-year dividend grew from $1.27 per share to $1.51 per share.

I’m expecting that the ASX bank share is going to achieve higher profit in 2023 thanks to the higher interest rate and how quickly it has passed rate rises on to borrowers.

I think a combination of stronger profit and larger dividends could excite investors about this business, particularly if loan arrears don’t substantially increase over the year.

According to Commsec, in FY23, NAB is projected to pay a grossed-up dividend yield of 7.7%.

Universal Store Holdings Ltd (ASX: UNI)

I think Universal Store is one of the most promising ASX retail shares. It’s focused on premium youth fashion brands, with both omnichannel retail and wholesale businesses. The company operates Universal and THRILLS, while trialling the Perfect Stranger brand as a standalone retail concept.

The ASX dividend share is steadily expanding its store network which, in turn, grows its ability to make profit.

It’s seeing customers “progressively re-engaging in social activities, enjoying reconnecting in a pre-COVID-like manner, which should lead to favourable trading conditions”. As a result, the company is expecting a higher rate of purchases.

With FY23 to date seeing an “improved” gross margin compared to FY22, and the company relocating to a larger, purpose-built facility for its store support office and distribution centre, I think the ASX dividend share could see higher profit margins in FY23.

According to Commsec, Universal Store is projected to pay a grossed-up dividend yield of 6.75%. By FY25, it could be paying a grossed-up dividend yield of close to 9%, according to the estimates.

GQG Partners Inc (ASX: GQG)

GQG is one of the leading fund managers on the ASX. Its main funds have delivered outperformance over the long term, and are continuing to attract investor funds. In the three months to December 2022, the business experienced net inflows of US$0.9 billion, despite volatility and uncertainty about the global share market.

But it seems interest rate increases could be getting close to the end. This could continue to improve investor sentiment, including the return of more fund inflows over 2023.

The ASX dividend share has committed to pay out 90% of its distributable earnings in dividends, which suggests that there could be good dividend payments in 2023 and beyond.

According to Commsec, GQG could pay an annual dividend per share of 11 cents, which would translate into a dividend yield 7.1%.

The post 3 ASX dividend shares I’m backing to outperform in 2023 appeared first on The Motley Fool Australia.

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More reading

• Buy these growing ASX dividend shares for passive income: Goldman
• Should I buy NAB shares for 2023 dividend potential?
• Investing in ASX 200 dividend shares? Here’s what to look for in 2023: fund manager
• How I’d invest $20,000 in ASX 200 dividend shares in 2023
• Experts say these ASX dividend shares are top buys right now

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

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Look, I know I should wash my car myself.

But, it’s a wagon. It’s high. And the roof rack doesn’t allow for easy access to the roof, and I didn’t have a high pressure hose, and…

… and, well, I’m just lazy sometimes

Finished judging me? Good!

(You’re not wrong. It’s just unpleasant, so stop it! )

Anyway, where was I?

Oh yes.

So… I decided to take the car down to the hand carwash place at my local shopping centre, grab a bite of lunch, and write an article while I waited.

(I wasn’t sure what I was going to write about but, well, the story just kinda came to me. Read on…)

I parked the car, jumped out, and the car wash bloke walked up.

Here’s how it went:

Me: “Just an external wash and vacuum please, mate.”

Him: “Do you want a polish?”

Me: “No, thanks”

Him: “It’ll look better with a polish.”

Me: “No, just the wash and vacuum.” [I hate it when people push stuff like that. But I let it slide.]

[He looks around the car]

Him: “That’ll be $110.”

Me: [rueful smile] No thanks, mate.

But it’s okay, because I knew there was another one in the next suburb, and there were good cafes nearby.

I drove over, and parked the car.

The sign says “Wagons from $60” (I drive a 2016 Prado).

Me: “Just an external wash and vacuum please, mate.”

Him: “No worries.”

[Looks around the car]

Him: “That’ll be $140.”

Bloody hell.

Suffice it to say, the car remains dirty at the time of writing.

And I saved myself $140 in a matter of seconds.

Now, for context, the last time I had it washed (too long, but not more than a few months), it was $85. I thought that was a lot, but grimaced and paid it.

Maybe 18-24 months ago, the same thing cost $65.

Now, other than a jaw-dropping story, I reckon this tells us a lot about the economy.

First, inflation is rampant.

Second, as both a cause and an effect, I’m guessing the staff are getting paid a LOT more than they were a few years back.

And third, the last 8 months of rate rises are clearly hurting some people, but the rest of the country is still spending up.

Big.

I’m going to bet you have your examples, too.

To be fair, I’m the first to say that a couple of anecdotes don’t make for representative data, let alone conclusive proof of anything.

But, seriously…

If you want to know why the RBA continues to hike rates – you don’t have to look far, do you?

It’s also why the inflation fight is so important. Whatever the causes of inflation – low rates, money printing, war, COVID etc. etc. – the job of the central bank is to clamp down on the second-order impacts that mean a car wash can ask for more than double the rate it was charging just a couple of years ago.

But it also calls into stark relief the bluntness of interest rates as the tool they’ve been given.

The RBA’s official cash rate has gone from 0.1% to 3.1%, but the car wash is still busy enough to charge double and be full (he told me it’d be a 2-hour rate, even at that price!).

Meaning?

Meaning that rates aren’t impacting everyone.

Probably not even most of us.

Renting? Rates don’t impact you.

Paid off your place? Rates don’t impact you (but might actually help if you’re getting more on your savings).

Paying off a mortgage? Thanks – you’re carrying the can on this one.

It’s not quite that simple, of course.

Higher rates impact small businesses (and large businesses) who’ve borrowed to grow.

And renters will end up having rents jacked up by landlords desperate to cover soaring repayments.

And then, of course, there’s the second-order impact of money being sucked out of spending and into repayments – money that’ll take cash out of the economy, that might have otherwise been spent at the shops.

But predominantly, it’s a very, very blunt tool, as I said, which disproportionately hurts some, actually helping others.

Yes, it’s ever been the case.

Yes, they chose to take on the debt.

But let me ask you: isn’t it likely we can find a better way to stimulate and/or cool the economy?

Something that shares the pain just a little more equitably?

Because even that ‘mortgage paying’ group isn’t a single mob.

Some bought a home 29 years ago, at prices that now seem like a steal. When rates go up, it hurts those people… a little. Because wages and house prices have grown a lot in the meantime.

And those who bought 5, 3 and 1 year ago?

They’re in a very different boat.

Should we really just shrug and say ‘Well, that’s just the way it is’?

I don’t think so.

If it was up to me, I’d use a three-pronged approach.

Interest rates absolutely have a role. So that’s the first bit.

The second and third?

I reckon there’s a case to alter the rates of the Superannuation Guarantee Levy (paid by employers) to take money out of the economy (and into Super) when things are running too hot, and to put more money into the economy when it needs a push.

(It’d still average the legislated amount, currently 10.5%, and when we got less in the pay packet, at least we’d know it was going to our own retirement.)

And the third is considered by our pollies to be the Tax Which Must Not Be Named (a Harry Potter reference for those who haven’t read the books!); the GST.

It should be easy enough to bump it up and down in line with the needs of the economy.

Of course, the question is how would you do it without those changes becoming political poison. And how, if the decision-makers weren’t independent, would you make sure the ‘temporary’ changes didn’t become permanent?

I think it’s solvable, but those are definitely the right questions.

In the meantime?

We’ve got a LOT of borrowers about to get a rude shock when their fixed rates suddenly become variable at much higher rates.

We’ve got a LOT of recent borrowers who will increasingly struggle with higher repayments, as house prices fall.

And we’ve got a LOT of inflation, meaning the RBA has little choice but to act, making sure they put rising prices to the sword, even if they end up going a little too far in the process (because going to far is much better, in the long term, than not going far enough).

There are lessons to be learned from the past few years.

Central banks were too cautious.

Governments were too reckless.

Regulators were too obsequious.

Banks were too optimistic.

Borrowers were too trusting.

Those are some of the lessons we’ve learned.

And they can be fixed.

But the most painful lesson, for many, might be in having to carry the can for the rest of us. And that’s something we should all learn from, and we should change before the next time.

Now, where did I put that car detergent and chamois?

Fool on!

The post What a dirty car tells us about inflation appeared first on The Motley Fool Australia.

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• Why Beach, Newcrest, Patriot Battery Metals, and Warrego Energy shares are rising
• Why top brokers say surge in CSL share price will continue
• Will Newmont offer more for Newcrest shares?
• Guess which ASX battery minerals share is surging 20% on a ‘massive’ find
• More rate hikes ahead? What can ASX 200 investors expect from the RBA tomorrow?

Motley Fool contributor Scott Phillips 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 on course to start the week in a subdued fashion. At the time of writing, the benchmark index is down 0.2% to 7,541 points.

Four ASX shares that are not letting that hold them back today are listed below. Here’s why they are rising:

Beach Energy Ltd (ASX: BPT)

The Beach Energy share price is up 3% to $1.53. Investors have been buying this energy producer’s shares following an update on the Waitsia Stage 2 project. According to the release, an agreement has been reached with Webuild for it to complete delivery of the Waitsia Stage 2 project, subject to finalisation of the Clough administration.

Newcrest Mining Ltd (ASX: NCM)

The Newcrest share price is up over 11% to $25.00. This has been driven by news that the gold miner has received a takeover approach from Newmont. The US mining giant has tabled a conditional and non-binding indicative proposal to acquire Newcrest for 0.380 Newmont shares for each Newcrest share. This equates to an offer of $27.40 per share, which is a 22% premium to the Newcrest share price at Friday’s close. The Newcrest board is considering the offer.

Patriot Battery Metals Inc (ASX: PMT)

The Patriot Battery Metals share price is up 13% to $1.88. This morning, this lithium explorer announced promising drilling results from the wholly owned Corvette Property in the James Bay Region of Quebec. Patriot reported that the first eight drill holes have intersected various widths of spodumene pegmatite, which has extended the strike length of the CV5 Pegmatite body by an additional 400m along strike eastwardly.

Warrego Energy Ltd (ASX: WGO)

The Warrego Energy share price is up 3% to 36 cents. This morning, Hancock Energy confirmed that it has increase its takeover offer for the energy explorer from 28 cents per share to 36 cents per share. This compares to its original offer of 23 cents per share.

The post Why Beach, Newcrest, Patriot Battery Metals, and Warrego Energy shares are rising appeared first on The Motley Fool Australia.

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More reading

• Will Newmont offer more for Newcrest shares?
• ASX lithium shares today: Two explorers that are thriving
• Newcrest share price jumps 14% on takeover approach
• 5 things to watch on the ASX 200 on Monday
• Why is the Newcrest share price fizzling out on Friday?

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 CSL Limited (ASX: CSL) share price has been on a roll lately, soaring more than 13.6% since its January low.

Right now, shares in the biotechnology giant are swapping hands for $312.35.

And it could be set to continue climbing, according to top brokers.

Here’s why experts have high hopes for the S&P/ASX 200 Index (ASX: XJO) healthcare staple.

CSL share price could continue to soar: top brokers

ASX 200 fans will know CSL well. The company is involved with the development of medicines, influenza vaccines, and recently acquired iron deficiency-focused Vifor.

It also operates a major plasma collection business. And that side of the company appears to be bolstering hope among top experts.

Morgan Stanley is one such optimistic broker. It has an overweight rating on CSL shares, slapping them with a $354 price target, my Fool colleague James reports. That represents a potential 12.9% upside.

Citi has also given the stock a buy rating and a $313.81 price target, The Australian reports.

Both brokers appear to have followed similar paths to reach their optimistic outlooks. That’s based on expectations the CSL’s Behring business (offering plasma-derived and recombinant therapies) could be set to grow.

Citi reportedly points out an increase in plasma collection centres in the United States, implying demand for immunoglobulin and albumin is growing.

Both brokers note that a recent earnings release from industry peer Takeda Pharmaceutical Co Ltd (NYSE: TAK) also suggests rising demand.

Meanwhile, Morgans and Bell Potter are also said to be hopeful on the stock. Though, the CSL share price has already surpassed Morgan’s $312.20 price target.

Bell Potter expects plasma volumes to grow by around 8% globally each year for the foreseeable future.

However, not all experts are so confident. Goldman Sachs is neutral on CSL and tips its share price to slump 3.6% to $302 over the coming 12 months.

The post Why top brokers say surge in CSL share price will continue appeared first on The Motley Fool Australia.

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More reading

• More rate hikes ahead? What can ASX 200 investors expect from the RBA tomorrow?
• Magellan share price pops then drops on ASX FUM update
• 5 things to watch on the ASX 200 on Monday
• Which ASX 200 shares are rebounding fastest in 2023?
• 20+ years of growing dividends. Why I plan to buy more of this ASX 200 stock in 2023

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 CSL and 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.

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Well, the big piece of ASX 200 news today is the offer from US gold miner Newmont Corporation (NYSE: NEM) to acquire the shares of the ASX’s largest gold miner, Newcrest Mining Ltd (ASX: NCM). At the time of writing, Newcrest shares have jumped by a whopping 11.9% to $25.12. That’s after closing at $22.45 last week:

As we covered this morning, Newmont has indicatively proposed to acquire Newcrest in full in an all-scrip, conditional offer. Newmont has put up 0.38 Newmont shares for every Newcrest share.

This values the ASX 200 gold miner at around $27.40 per share, taking into account exchange rates and Newmont’s share price. That represents a 22% premium to Newcrest’s closing share price on Friday.

Newmont has already made an offer for Newcrest, previously offering 0.363 Newmont shares for every Newcrst share. But this was quickly rejected at the time. Newcrest shunned the deal on valuation grounds.

But this higher offer has definitely gotten some more consideration from Newcrest. The company hasn’t rejected the offer. But it hasn’t yet accepted it either. Here’s what Newcrest said in its announcement today:

The Newcrest Board, together with its financial and legal advisers, is considering the Indicative Proposal.

The Newcrest Board advises that shareholders need not take any action in relation to the Indicative Proposal and remains fully committed to acting in the best interests of Newcrest shareholders.

So perhaps Newcrest’s management is trying to wring a little extra value out of Newmont.

Could Newmont up its offer for shares of ASX 200 gold miner Newcrest?

Shareholders will certainly be hoping so, anyway. According to reporting in The Australian today, at least one shareholder stated that they didn’t believe that the offer was high enough, and “would prefer a cash offer” for Newcrest shares.

Shareholders are reportedly unhappy with the recent performance at Newcrest. Here’s some of what was reported:

[Shareholders] believed that the company had been deploying too much of their capital in business interests elsewhere and needed to focus more of its attention on its core operations and ensure they were firing.

So it’s unclear whether these concerns will end up influencing any future offer from Newmont. Like with any transaction, Newmont will be hoping to acquire Newcrest at the cheapest price possible, just like Newcrest wants the best price it can get.

Only time will tell if Newmont is prepared to put even more on the table in its quest to acquire Newcrest. So watch this space.

In the meantime, the current Newcrest Mining share price gives this ASX 200 gold miner a market capitalisation of $20.65 billion, with a dividend yield of 1.58%.

 

The post Will Newmont offer more for Newcrest shares? appeared first on The Motley Fool Australia.

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• Newcrest share price jumps 14% on takeover approach
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• The gold price is near 9-month highs. Could these ASX 200 mining stocks be set to soar?
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor Sebastian Bowen has positions in Newcrest Mining. 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 Kuniko Ltd (ASX: KNI) share price is having a sensational start to the week.

In afternoon trade, the ASX battery materials share is up almost 20% to 58 cents.

Why is the Kuniko share price rocketing higher?

Investors have been fighting to get hold of the company’s shares on Monday following the release of a promising announcement.

According to the release, Kuniko has observed significant mineralised intervals with massive sulphides of greater than 90% in diamond drill core in preliminary logging from current drilling at the Ertelien Nickel Project in Norway.

Furthermore, assay results confirm high grade Nickel-Copper-Cobalt mineralisation from historical drill core sampled from the Ertelien Nickel Project and the nearby Langedalen Prospect, with significant intervals.

All in all, management believes that this is a “strong signal of future economic potential.”

Management commentary

Kuniko’s CEO, Antony Beckmand, was very pleased with the news. He said:

We are delighted that our maiden drill hole at Ertelien has delivered a great result, returning several intersections of observable massive sulphides. This, combined with the high-grade assay results from the historic drill core demonstrates this project and the Ringerike area is, as expected, highly prospective for further development.

The presence of multiple battery mineral elements identified at this project, is a strong signal of future economic potential, encouraging us to aggressively pursue our target of defining a maiden JORC resource at this site. The Ertelien Nickel Project, like our Skuterud Cobalt Project, is close to Oslo with readily available infrastructure including hydroelectric based power.

Despite today’s strong gain, the ASX battery materials share is still down over 40% since this time last year, as you can see on the chart below.

The post Guess which ASX battery minerals share is surging 20% on a ‘massive’ find 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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S&P/ASX 200 Index (ASX: XJO) investors will be tuning in tomorrow afternoon to find out the latest interest rate decision from the Reserve Bank of Australia (RBA).

With inflation running hot, the RBA lifted the official cash rate from the all-time low of 0.10% to the still historically low 0.35% on 4 May last year.

That was the first time the RBA had increased the interest rate since 10 November 2010.

And, as you’re most likely aware, the central bank hasn’t let off since May.

December marked the eighth consecutive month of rate increases, bringing the current cash rate to 3.35%, the highest rates since September 2012.

The RBA is faced with stubbornly high core inflation figures, though household spending and the labour market are showing some signs of slowing.

With that in mind, what can ASX 200 investors expect from the bank tomorrow?

What’s in store for the ASX 200 when the RBA reports tomorrow?

So far in 2023, the ASX 200 has thrown off its 2022 jitters about rising interest rates, with the benchmark index up a remarkable 7.2% year-to-date.

But any outsized increase could see the benchmark index drop while a pause in the tightening cycle would likely see shares rally.

With that said, here’s what the experts are forecasting.

According to Frank Uhlenbruch, investment strategist at the Janus Henderson Australian Fixed Interest team:

Our base case cash rate view remains unchanged and has the RBA lifting the cash rate by 0.25% in February and then pausing to monitor the path of demand. Provided demand responds to earlier tightening, we look for a late tightening cycle 0.25% “inflation insurance” move in May. This would take the cash rate to a moderately restrictive 3.60%, making the current tightening cycle the largest and fastest in the monetary policy inflation targeting era.

Janus Henderson does not believe the RBA will cut rates until 2024.

Josh Gilbert, market analyst at eToro also sees another increase coming tomorrow but believes we’re close to or at the last one.

“Another hike looks set to be delivered by [RBA] governor Lowe, but the peak of this cycle is in touching distance,” he said.

Andrew Ticehurst, macro strategist at Nomura Holdings, believes ASX 200 investors should be prepared for an outsized rate hike rather than any dovish pivot tomorrow.

“The RBA finds itself in a tight spot, with widespread data now showing the economy is cooling, but core inflation is uncomfortably hot,” he said (quoted by Bloomberg). “The risk would be for a larger move, rather than no move, in our view.”

What’s the consensus view?

According to a poll of 24 economists conducted by The Australian Financial Review, ASX 200 investors will most likely see a 0.25% rate increase tomorrow, with 22 expecting a quarter percentage point hike.

As for the full year, five of the 24 economists believe the RBA will cut rates once or twice in the second half of 2023. The rest believe we’ll need to wait until at least 2024 for some relief.

The median expectation from the polled economists sees the official cash rate peaking at 3.6%.

HSBC chief economist Paul Bloxham believes we’ll reach that 3.6% peak on 7 March, noting that it’s “too soon to be convinced that inflation will get back to target anytime soon”.

“We forecast the cash rate on hold at 3.6% to end 2024 and do not forecast beyond that,” he said.

Stephen Smith, partner at Deloitte Access Economics, also believes the RBA will boost rates by another 0.25% on Tuesday. Though he thinks the central bank would do better by holding at current levels. A belief likely shared by most ASX 200 investors.

“It seems likely the RBA will increase by 25 basis points to 3.35% on Tuesday,” he said. “However, we think that we are now in the territory where further increases in the cash rate beyond 3.1% would be a mistake.”

The post More rate hikes ahead? What can ASX 200 investors expect from the RBA tomorrow? appeared first on The Motley Fool Australia.

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

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The Insurance Australia Group Ltd (ASX: IAG) share price is having a tough start to the week.

In afternoon trade, the insurance giant’s shares are down almost 4% to $4.55.

Why is the IAG share price under pressure?

The weakness in the IAG share price on Monday appears to have been driven by a broker note out of Morgans.

According to the note, the broker has downgraded the insurer’s shares from a buy rating to a hold rating and cut the price target on them to $5.04.

While this still implies decent upside of 10% for its shares over the next 12 months, it isn’t enough for the broker to have a more positive recommendation.

This is due to its concerns over recent updates and uncertainty over its new strategy. Morgans commented:

IAG is a quality franchise and we think the CEO’s strategy to improve core insurance performance is the correct one. However after a period of disappointing market updates, we need to see clearer progress on execution to gain comfort. With the gap between our revised valuation (A$5.04) and IAG’s share price reduced, we move back to a HOLD.

The broker also revealed that it has cut its earnings forecast materially for FY 2023 due to its half year update, which fell well short of expectations.

On IAG’s 1H23 reported results, the headline 1H23 NPAT figure was 20% below consensus due to reserve strengthening (A$48m), but also mainly a large decline in IAG’s underlying insurance margin (UIM) to 10.7% (versus 15.1% in the pcp). […] We downgrade IAG FY23F EPS by 33% on the softer 1H23 performance and also reduced full year guidance expectations. FY24F/FY25F EPS changes are minimal (~+1%) with higher premium growth offsetting softer margin expectations. Our PT is lowered to A$5.04.

The post IAG share price tumbles on broker downgrade 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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Virgin Australia could rejoin the ASX ranks with an initial public offering (IPO) in the near future.

It’s been nearly two years and three months since the Qantas Airways Limited (ASX: QAN) competitor was last seen on the ASX boards. During this time, the S&P/ASX 200 Index (ASX: XJO) climbed roughly 15%.

The latest rumours suggest the number of airlines in the public markets could soon tick one higher as the old Flying Kangaroo’s rival seeks its second chance with retail investors.

How close could we be to the Virgin IPO?

From yielding to a private equity buyout from Bain Capital during the depths of administration to posting a $125 million half-year profit, Virgin Australia has come a long way.

The mighty resurgence in consumer spending — namely on travel — has been a boon for once-struggling airlines. Pent-up demand post-COVID manifested itself as an insatiable appetite for exploration, both internationally and domestically.

As such, Virgin’s financials are believed to have improved substantially, giving Bain Capital something to boast about in IPO talks.

On Friday, the Australian Financial Review reported on where Virgin was situated with finding lead managers for coordinating an ASX return. The investment banks in the running are believed to be:

• Jefferies
• Credit Suisse
• Goldman Sachs
• Morgan Stanley
• UBS
• Bank of America; and
• Barrenjoey

It was said that up to four investment banks could be selected within the next two weeks to assist with the Virgin IPO.

Unfortunately, an exact timeline has not yet been revealed on when Virgin could fly into the ASX again. However, in January, Virgin Australia chief executive Jayne Hrdlicka said an IPO would be conducted “at the earliest opportunity”.

Will the Qantas share price keep gliding?

Despite the prospects of Virgin making a splash with its IPO, the Qantas share price has been resilient so far in 2023. Shares in Australia’s most prominent airline are up 7.8% since the start of the year.

Remarkably, the Qantas share price is now up 40% over the past six months. Perpetual portfolio manager James Rutledge believes that the Aussie airline might now be nearing ‘fair value’. However, Rutledge doesn’t foresee Virgin’s IPO as materially detrimental to Qantas.

In talking to the AFR, the portfolio manager noted that Virgin will likely focus on profits rather than market share post-IPO.

Meanwhile, the team at Goldman Sachs thinks there could be another 33% upside to the Qantas share price. As my colleague covered last week, Goldman is pencilling in an $8.50 share price based on its improved earnings capacity.

The post Virgin IPO talks are heating up. So why is the Qantas share price still climbing? 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 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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