It has been a day to forget for the St Barbara Ltd (ASX: SBM) share price.

On Tuesday afternoon, the gold miner’s shares are down a disappointing 22% to 52.2 cents.

Why is the St Barbara share price crashing?

Investors have been selling down the St Barbara share price on Tuesday after the gold miner released its first quarter update.

According to the release, St Barbara produced 63,700 ounces of gold during the quarter at an all-in sustaining cost (AISC) of $2,490 an ounce.

Compared to the fourth quarter, this means that St Barbara’s production was down almost 26% and its costs were up a massive 34.8%.

And with St Barbara commanding an average gold price of $2,486 per ounce, it was costing the company $4 per ounce more to produce the precious metal than it received for it. Ouch!

What happened?

Management advised that although the company’s Simberi and Atlantic operations performed in line with expectations, a slower than anticipated ramp up in underground mine equipment availability and utilisation impacted production at the Leonora operation (Gwalia mine).

In light of the above, St Barbara has been forced to downgrade its guidance for FY 2023.

The release reveals that the company now expects consolidated gold production of 260,000 to 290,000 ounces at an AISC of $2,250 to $2,500 per ounce.

This compares to its previous guidance of 280,000 to 315,000 ounce at an AISC of $2,050 to $2,150 per ounce.

In addition, management has decided to defer some of its capital expenditure plans for at least 12 months. This includes the planned Leonora Processing Plant expansion to 2.1Mtpa, refractory ore circuit upgrade at the Leonora Processing Plant, and the construction of the Aphrodite mine.

The Firetrail Australian Small Companies Fund recently described St Barbara as “one of the cheapest gold stocks globally.” It seems it was cheap for a reason.

The post Why are shares in ASX 200 gold miner St Barbara crashing 22% today? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX 200 shares today
• Why Dubber, Johns Lyng, Seek, and St Barbara shares are sinking today
• 5 things to watch on the ASX 200 on Friday
• 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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The iron ore price has been tumbling lately, so are BHP Group Ltd (ASX: BHP) shares still worth buying?

BHP shares are up 1.07% today, trading at $39.51 apiece at the time of writing. For perspective, the S&P/ASX 200 Index (ASX: XJO) is up 1.38% so far today.

Let’s check the outlook for BHP shares.

Iron ore prices fall amid China Covid-zero policy

BHP is a major iron ore producer. In fact, iron ore accounted for more than half of BHP’s total earnings in FY22. BHP also explores copper, potash, and coal, among other commodities.

The iron ore price closed down 1.55% overnight, fetching US$95 a tonne, Trading Economics data shows. It’s the lowest level since November last year. Iron ore was trading at around US$160 a tonne in March and for almost US$230 a tonne in May 2021.

Iron ore prices are continuing to fall amid news China is maintaining its COVID-19 zero strategy, curtailing the nation’s economic growth prospects. China is the largest iron ore importer in the world. In a research note, ANZ economist Felicity Emmett said:

China has reiterated it will adhere to its COVID policy, and things were further complicated by the recent surge in cases. Negative margins and production curbs to reduce air pollution are leaving more downside for steel production.

Meanwhile, Commonwealth Bank of Australia (ASX: CBA) analyst Vivek Dhar said China easing its COVID-19 policy would have been “potential salvation” for commodities, the Australian Financial Review reported.

However, despite the macro headwinds, some analysts have recently seen potential upside for the BHP share price.

Macquarie placed an outperform rating with a $45 price target on BHP shares in early October. Goldman Sachs also recently maintained a buy rating on BHP shares with a $40.50 price target. Meantime, Morgans has an add rating on BHP shares, however, the broker has cut its price target on the company’s shares to $47.40.

Share price snapshot

BHP shares have risen 13% in the past year, while they are up nearly 7% year to date.

For perspective, the ASX 200 has lost nearly 9% in the past 12 months.

BHP has a market capitalisation of more than $200 billion based on the current share price.

The post Is it wise to buy BHP shares amid falling iron ore prices? appeared first on The Motley Fool Australia.

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More reading

• Why did the BHP share price melt down on Monday?
• Opportunities across the mining sector: Expert names ASX 200 shares to buy
• Top brokers name 3 ASX shares to buy next week
• If I’d invested $5,000 in these 5 ASX shares five years ago, here’s what I’d have now
• Do you want the good news or the bad news on the iron ore price?

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 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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ASX-listed Star Casino is persevering today, despite the company being strapped with a $100 million fine and license suspension.

To the surprise of many, the Star Entertainment Group Ltd (ASX: SGR) share price is 1.3% higher than where it finished yesterday. Then again, nearly 90% of the top 200 listed companies are in the green today following a rebound in US markets overnight.

For Star shareholders, answers to old questions have only created new ones. For instance, how will this large financial punishment impact the company? Does Star even have a lazy $100 million lying around in cash to foot the bill?

Let’s dive into the details.

Where will the money come from?

As previously covered, the NSW Independent Casino Commission handed down a $100 million fine to Star yesterday upon its determination.

This, in conjunction with the removal of its license, was the result of findings into the company failing to appropriately operate. Now the question on the lips of shareholders is: What’s next?

For starters, the ASX-listed Star Casino will need to find a hefty $100 million somewhere to pay for its wrongdoings. However, the company only held $82 million in cash and equivalents at the end of June 2022.

Notably, there is a considerable amount of debt already on the company’s balance sheet. At the end of FY22, Star had over $1.3 billion in interest-bearing liabilities. Furthermore, cash flows for the latest financial year were as follows:

• Cash flows from operating activities: $176.2 million
• Cash flows from investing activities: -$122 million
• Cash flows from financing activities: -$40.1 million

Overall, the ASX-listed Star Casino finished the full year with only $14.1 million worth of positive cash flow. This could mean shareholders will need to go even longer without dividends.

It seems Star might need to do one (or a combination of three things): raise capital/debt, cut back expenses, and/or increase income; in order to pay its fine.

CEO’s take on ASX-listed Star Casino

The recently appointed new CEO, Robbie Cooke, shared his thoughts following the outcome. As reported by The Australian, Cooke said:

The business is not broken. [But we need to show] that we are operating at the highest intergrity level.

There is a 100 per cent desire from the Star point of view that we want to get the business back to suitability. We are very determined to put in place systems and procedures that are necessary to do that.

On a positive note, Cooke will have the chance to redeem Star. A potential alternative outcome was the complete shutdown of the casino operator. Though, the NICC decided that such an option wouldn’t have been productive.

Star Casino has suffered on the ASX so far this year. The damage toll has reached nearly 30% on a year-to-date basis.

The post Does ASX 200-listed Star Casino have the cash for its $100 million fine? appeared first on The Motley Fool Australia.

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More reading

• Star Entertainment share price halted amid $100m fine and casino license suspension
• Here are the top 10 ASX 200 shares today
• Star Entertainment share price lifts on ‘significant and urgent remedial steps’
• Star Entertainment share price dips as acting CEO resigns

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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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

The incredibly unpredictable price action seen in the cryptocurrency sector is once again in full focus today. In aggregate, the crypto market has moved meaningfully in tandem today, with the overall market rising a little more than 1.5% over the past 24 hours, as of 1:45 p.m. ET. 

That said, megacap tokens Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH), and Cronos (CRYPTO: CRO) remain in focus for most investors, given the size and importance of these key blockchain projects. As of 1:45 p.m. ET, these three tokens surged 1.8%, 2.8%, and 4.4%, respectively, over the past 24 hours.

Interestingly, Bitcoin‘s move (which was the smallest of the three) follows an 85-minute window on Monday in which no blocks were produced. A difficulty adjustment appears to be tied to this issue, which raised eyebrows in the crypto world.

Other top tokens like Ethereum and Cronos have their own individual catalysts and headwinds. This week, it was announced that XRP is beginning to test a side chain compatible with Ethereum smart contracts. And Cronos has been benefiting from recent gaming-related updates, which have investors intrigued in this blockchain project’s growth potential.

That said, the potential for further interest rate hikes by the Federal Reserve continue to provide headwinds for all risk assets. This makes the price action in these top tokens even more difficult to understand. 

So what

There’s some very wonky thinking that appears to be taking hold in the markets right now. Given last week’s hotter-than-expected CPI and PPI prints, most investors initially took the view that this would lead to more rate hikes, which are bad for risk assets. Cryptos, equities, and bonds sold off immediately on the news.

However, the past few days have seen some bullish momentum return, as some appear to be taking the view that more rate hikes in the near term could lead to a recession in the medium term. Such a recession could result in lower interest rates sooner than expected.

This second-derivative sentiment appears to be at play once again today, with the majority of near-term catalysts appearing to represent net negatives for cryptos still.

Now what

The difficulty of forecasting monetary policy decisions remains extremely high, and with most experts failing to see the inflation we’re now battling, one could argue that any sort of forward-looking forecast is likely to be incorrect. Such is the nature of forecasts.      

That said, the idea that we could be due for lower interest rates in the medium term, as the Federal Reserve breaks something, is one that’s starting to gather steam. For risk assets such as cryptos, a return of cheap(er) capital to the system could be the catalyst to drive valuations another leg higher. We’ll have to see what happens in the months and quarters to come, but suffice it to say, there’s plenty for investors to digest right now.  

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

The post Crypto surges: Is now the time to buy Bitcoin and Ethereum? appeared first on The Motley Fool Australia.

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• Is this controversial Ethereum-killer finally a buy?
• I’ve already made 158% on Bitcoin. Here’s why I keep holding
• Is Google now joining the crypto party following its latest move?
• Why is the Bitcoin price outperforming for Australian crypto investors?
• The Bitcoin price just tumbled back below US$20,000. What’s happening?

Chris MacDonald has positions in Ethereum. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin and Ethereum. The Motley Fool Australia owns and has recommended Bitcoin and Ethereum. 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 Block Inc (ASX: SQ2) share price is charging higher today, up 8.6% at the time of writing.

Block shares closed yesterday trading for $83.93 and are currently trading for $91.14 apiece.

So, what’s driving investor interest in the buy now, pay later (BNPL) share?

What’s piquing ASX 200 investor interest today?

There’s no price-sensitive news out today to directly impact the Block share price.

The surge comes amid a wider rally in stocks, fuelled by another very strong day in US markets overnight.

Block, which acquired Afterpay in January, is dual listed, both on the ASX and NYSE. And the Block share price finished the day up 8.6% on the NYSE yesterday, with shares up another 2.0% in after-hours trading.

With US stocks leaping higher, the S&P/ASX 200 Index (ASX: XJO) is also up 1.3% at the time of writing.

And BNPL shares are having a particularly strong day. The Zip Co Ltd (ASX: ZIP) share price is up 4.5%, and shares in Sezzle Inc (ASX: SZL) are soaring 12.6%.

The overall strength in the BNPL sector today is likely spurred on by the earnings results from Bank of America Corp (NYSE: BAC). The 13% year-on-year increase in credit card spending the bank reported yesterday beat market expectations. And that increase was topped off by a decrease in customer delinquencies.

With a large footprint in the US, the Block share price will be enjoying some healthy headwinds from the demonstrated resilience of US consumers, despite soaring inflation and fast-rising interest rates.

The big credit card figures bode well for BNPL payment use in the world’s top economy. And with the sector plagued by significant customer defaults, Bank of America’s falling delinquency numbers will also come as good news to investors.

Block share price snapshot

The Block share price has seen its fair share of big ups and downs since listing on the ASX on 20 January.

With steeper falls than climbs, Block shares are down 49% since listing.

The post Here’s why the Block share price just rocketed 8% appeared first on The Motley Fool Australia.

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• These are the 10 most shorted ASX shares
• Down 49% this year, here’s why I’m still holding my Block shares
• After a horror year, what’s next for ASX BNPL shares in the new quarter?
• Why Baby Bunting, Block, Fortescue, and Santos shares are dropping
• What’s the outlook for ASX 200 tech shares in the second quarter?

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 Block, Inc. and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended Block, Inc. 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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Lithium has been the talk of the S&P/ASX 200 Index (ASX: XJO) in 2022, and shares in Lake Resources NL (ASX: LKE) have received particular attention.

The company was added to the iconic index in June after its value surged by more than 40% over the first six months of the year. Since then, it has fallen by around 20% amid its boss’ resignation, a short seller attack, and a dispute between the company and its joint venture partner.

The Lake Resources share price is $1.037 at the time of writing.

But is the ASX 200 lithium share profitable? Keep reading to find out.

Is ASX 200 lithium share Lake Resources profitable?

Those hopeful Lake Resources could be a profitable ASX 200 lithium share will be disappointed to learn it’s still operating in the red.

The majority of the company’s efforts go towards its wholly owned Kachi Lithium Brine Project, located in Argentina.

The project is expected to produce 50,000 tonnes of battery-quality lithium carbonate each year, as per its pre-feasibility study.

The company is also looking to double the project’s capacity. It’s pushing on with a drill campaign to help support its case.

But exploration and development bring plenty of costs. And, as the company isn’t producing any lithium to sell, it doesn’t yet have any income.

The company posted a $5.68 million loss for financial year 2022 ­– representing a 51-cent loss per share.

It also revealed an outflow from operating activities amounting to $8.68 million for the 12 months ended 30 June. Though, Lake Resources received $174 million from issuing shares.

All in all, the company ended last financial year with $175.4 million of cash and no debt. That leaves it financed through to the final investment decision on the Kachi Project.

The post Is ASX 200 lithium player Lake Resources profitable? appeared first on The Motley Fool Australia.

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• The Telstra share price is still trading at less than half its record highs. Time to pounce?
• 3 ASX 200 lithium shares that turned a $10,000 investment into $500,000
• This is what will get ASX shares rising again early 2023: economist
• 5 things to watch on the ASX 200 on Tuesday
• 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 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 has been a stunning day of trade for the Hub24 Ltd (ASX: HUB) share price.

In afternoon trade, the investment platform provider’s shares are up almost 14% to $25.10.

This makes it the best performer on the ASX 200 index on Tuesday.

Why is the Hub24 share price racing higher?

Investors have been scrambling to buy the company’s shares following the release of its latest quarterly update.

According to the release, Hub24 had a strong first quarter and delivered platform net inflows of $3 billion for the three months.

And while this is down 1.6% on the net inflows recorded a year earlier, it is still very strong in the current environment. Especially compared to what fund managers like Magellan Financial Group Ltd (ASX: MFG) have been reporting.

The release reveals that these inflows took Hub24’s platform funds under administration (FUA) to $52.4 billion. Which, after accounting for negative market movement of $0.3 billion, represents a net increase of $2.7 billion since the end of FY 2022.

This was driven by continued growth in the number of advisers on its platform. Hub24 now has 3,639 advisers, up 13% year over year and 4.3% since the end of FY 2022.

Change of deposit agreement

In other news, Hub24 revealed that it is ditching Australia and New Zealand Banking Group Ltd (ASX: ANZ) in favour of Bank of Queensland Ltd (ASX: BOQ) for deposits. This is expected to result in a reduction in its average platform cash management fees.

Management explained:

Following a competitive selection process HUB24 has signed an agreement with Bank of Queensland which will take effect from 2nd December 2022. As a result of this change in providers, and subject to portfolio mix fluctuations, this is expected to result in a reduction in the rate of HUB24’s current average platform cash management fee of between 0.20% pa to 0.30% pa.

The post Guess which ASX 200 tech share is surging 14% following a $3 billion quarter appeared first on The Motley Fool Australia.

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• Here are the top 10 ASX 200 shares today
• Why ‘we’re quite bullish’ on this battered ASX 200 growth share: fundie

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 Hub24 Ltd. The Motley Fool Australia has positions in and has recommended Hub24 Ltd. 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 Telstra Corporation Ltd (ASX: TLS) share price is in the green today, and decisively so. Telstra shares are presently up by a pleasing 1.32% at $3.84 a share.

That’s only just behind the S&P/ASX 200 Index (ASX: XJO), which is currently up by an even more robust 1.43%.

But here’s a fact that will probably make Telstra investors a little more envious. Telstra is, at these levels, not even close to its all-time high. In fact, it’s less than halfway there. Back in late 1999, the telco was commanding a share price close to $9 a share.

Of course, that doesn’t mean too much today. Back at the turn of the millennium, the markets were in full-froth mode, with the dot-com bust about to swing its axe. And those were pre-broadband, pre-mobile phone and landline-heavy times. That near-$9-a-share Telstra was a very different beast to the company we see today.

But still, Telstra shares have had a rough time of it lately. The telco remains down 9% in 2022 thus far, and down by 0.8% over the past 12 months.

Does this mean Telstra shares are a buy today?

So, could this be the time to pounce on his famous ASX dividend share? The company is sitting on a trailing and fully franked dividend yield of 4.3% at these prices, after all.

Well, one ASX broker who thinks it is worth a look is Morgans. As my Fool colleague James covered just yesterday, Morgans has just rated the telco as an add.

It also gave Telstra a 12-month share price target of $4.60 This implies a potential upside of close to 20% over the coming year if accurate.

Morgans stated that it believes some of Telstra’s assets, such as InfraCo, are worth “substantially more” than the pricing the whole company is currently commanding. Together with the woes that its rival Optus is currently facing, the broker is predicting that Telstra “looks well placed for the year ahead”.

No doubt that will be music to investors’ ears today.

At the current Telstra share price, this ASX 200 blue chip share has a market capitalisation of $43.8 billion.

The post The Telstra share price is still trading at less than half its record highs. Time to pounce? appeared first on The Motley Fool Australia.

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• Is ASX 200 lithium player Lake Resources profitable?
• 3 ASX 200 lithium shares that turned a $10,000 investment into $500,000
• This is what will get ASX shares rising again early 2023: economist
• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Sebastian Bowen has positions in Telstra Corporation 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 positions in and has recommended Telstra Corporation Limited. 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 leading investors from Wilson Asset Management (WAM) have shared two compelling S&P/ASX 200 Index (ASX: XJO) investment prospects on their radar.

WAM operates several listed investment companies (LICs). Some, like WAM Leaders Ltd (ASX: WLE), focus on larger companies.

Meanwhile, WAM Capital Limited (ASX: WAM) targets “the most compelling undervalued growth opportunities in the Australian market”.

But does WAM have a claim of stock-picking pedigree? The WAM Capital portfolio has delivered an investment return of 14.7% per annum since its inception in August 1999. That’s before fees, expenses, and taxes. This gross return outperformed the All Ordinaries Total Accumulation Index (ASX: XAOA) return of 7.9% per annum over the same timeframe.

With that in mind, here are the two ASX 200 shares WAM Capital has outlined in its recent monthly update.

Premier Investments Limited (ASX: PMV)

WAM describes Premier Investments as a business that owns and operates a group of retail, consumer products, and wholesale businesses.

Last month, the business announced its FY22 result, achieving a 4.9% year-over-year increase in statutory net profit after tax (NPAT) to $285.2 million.

The business also declared a fully franked final dividend of 54 cents per share as well as a fully franked special dividend of 25 cents per share.

The ASX 200 share managed to generate $1.5 billion of retail sales and record retail earnings before interest and tax (EBIT) of $352.5 million. This is despite suffering from “significant” operational challenges including lockdowns, global supply chain complexities, and disruptions caused by the Omicron COVID variant.

WAM was also pleased by the company’s decision to announce a 12-month on-market share buyback of up to $50 million. This will allow the company to deliver a boost to earnings per share (EPS) and increase total shareholder returns.

However, the fund manager noted that the retail sector could see some volatility due to rising interest rates and a declining wealth effect in the short term.

So, why is WAM positive on the ASX 200 share? The fund manager said:

We believe Premier Investments is well-positioned given the opportunity for ongoing global expansion of Smiggle and potentially Peter Alexander – market-leading domestic brands with leverage to the re-opening theme along with a very strong balance sheet and management team that is positioned to capitalise on any opportunities that may present.

Event Hospitality and Entertainment Ltd (ASX: EVT)

This cinema, hotels, leisure assets, and property ASX 200 share is WAM’s other pick.

The Event Hospitality and Entertainment share price fell during September, like the rest of the ASX share market.

However, the fund manager believes the business is “well-positioned to benefit from the shift in consumer spend from goods to experiences in the near-term, underpinned by an improving theatrical content slate for cinemas, progressive recovery in international tourism for the hotels business and a solid winter 2022 result at Thredbo.”

On top of that, the investment team believes that its assets are being undervalued as well. It said:

We believe Event Hospitality and Entertainment assets remain undervalued and we estimate that the operating businesses are trading on approximately 4x enterprise value to earnings before interest, tax, depreciation and amortisation (EBITDA) at current share price levels, a significant discount to our intrinsic valuation.

The post These 2 ASX 200 shares are ‘compelling growth opportunities’: fund manager 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 recommended Premier Investments Limited. 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’ve been closely following the big swings in the US stock market recently, you’ll be forgiven for feeling a little motion sick.

Volatility has been the name of the game over the past three trading days, in moves mirrored here by the S&P/ASX 200 Index (ASX: XJO).

Last Thursday, the S&P 500 Index (SP: .INX) ended the day up 2.6%, after initially tumbling 2% on open following higher-than-expected inflation figures. Those moves were reversed on Friday when the S&P 500 finished down 2.3%.

But investors in the US stock markets shook off that malaise yesterday (overnight Aussie time) to again send the S&P 500 up 2.7%. Tech stocks fared even better, with the Nasdaq Composite (NASDAQ: .IXIC) closing up 3.4%.

Reaching for your Dramamine yet?

What’s happening with the US stock market?

Investors and traders alike appear to be on a knife edge over whether markets are signalling a bottom or whether there’s more downside to come.

Last week’s volatility was driven by the higher-than-forecast September inflation data. The rally on that higher data looks to have been caused by a wave of short-sellers needing to cover their positions when they were caught on the wrong side of the trend.

The next day’s steep losses came as more of a direct response to those inflation numbers.

Which brings us to Monday.

The big lift in US stock markets yesterday was partly fuelled by expectation-beating earnings results from Bank of America Corp (NYSE: BAC).

A 13% year-on-year lift in credit card spending at the bank, coupled with falling delinquencies, showed US consumers remained resilient in the face of rising rates and high inflation.

Bank of America, with a market cap of some US$270 billion (AU$428 billion), closed up 6% on the results, helping drive the US stock market to another big day of gains.

The US stock market also got a boost from the United Kingdom. Investors were clearly pleased that many of the dramatic economic policies proposed by prime minister Liz Truss have been rolled back.

Topping it off, the recent big price swings also have analysts pondering whether markets are signalling that a bottom is forming.

Here’s what the experts are saying

Commenting on the big moves in the US stock market, Phil Blancato, CEO of Ladenburg Thalmann Asset Management, said (courtesy of Reuters):

The information coming out of the banks are much better than anticipated. Even though there was a drop in earnings they’re making significant income on their cash. So this recession is not a consumer-based recession. It’s not a bank-based recession if you can even call it one. It’s simply a cyclical slowdown.

Those are the best because they generally take around 10 months to recover which is right where we are. Inflation is not slowing the economy down. If we get any kind of recession it’s mild. For that reason, when you look at stocks trading now below their P/E [price to earnings] averages, stocks are fairly valued again and offer a good opportunity.

Siddharth Singhai, chief investment officer at Ironhold Capital, didn’t share that bullish sentiment on the US stock market.

“This seems to be a faux rally fuelled by lower inflation expectations, I don’t think the rally makes sense. Interest rate hikes are not getting discounted by the market,” he said.

Peter Tuz, president of Chase Investment Counsel, added (quoted by Reuters):

I was thinking that the bank earnings, especially Bank of America, was really pretty optimistic, and that coupled with the abandonment of restrictive policies in England just seemed to be the fuel that got the market going this morning.

There were some pretty rough days last week… The choppiness and volatility that we are seeing is part of the bottoming process. The fourth quarter generally is pretty good for markets historically.

If the US stock market, and by extension the ASX 200, is indeed in the process of forming a bottom, investors can expect more volatility during the rebound.

As with combatting motion sickness on a boat, the best bet is to keep your eyes fixed on the horizon and not fret about the daily ups and downs.

The post Bank or bust: What on earth is going on with the US stock market? appeared first on The Motley Fool Australia.

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• Why are ASX 200 shares going gangbusters on Tuesday?
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Bank of America is an advertising partner of The Ascent, a Motley Fool company. 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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