It’s funny to think that technology stocks were all the rage only just a year ago but are completely out of favour now.

The S&P/ASX All Technology Index (ASX: XTX) had, in fact, risen a phenomenal 155% from the COVID-19 trough in March 2020 to November last year.

But over the past 12 months, the index has lost 28%.

However, with inflation looking to peak and the end of steeply rising interest rises in sight, many experts have tipped tech to make a comeback in 2023.

Still plenty of scepticism about tech

But as the old saying goes, “once bitten, twice shy”.

On Thursday, the broader S&P/ASX 200 Index (ASX: XJO) rallied an impressive 0.96%, but tech shares missed out on the party.

In fact, Shaw and Partners portfolio manager James Gerrish noted that quite a few of them sold off.

“Altium Limited (ASX: ALU) opened close to $40 before sliding lower all day,” he said in his Market Matters newsletter.

“In other words, at this stage investors are far from convinced that the tech sector can make a meaningful dent in the losses endured through 2022.”

But the tide will turn sooner or later

But Gerrish considers Altium a buy right now, as the sentiment for technology will turn soon.

“Market Matters remains long and bullish on Altium,” he said.

“We can see Altium testing well above $40 into Christmas.”

The share price for the ASX 200 electronics design software provider has already risen 7.5% over the past month.

And it’s not the only tech share he’s keen on at the moment.

“We’ve chosen Altium to make our point here but it could easily have been Seek Limited (ASX: SEK) or REA Group Limited (ASX: REA).”

Gerrish had previously tipped both of those stocks to lead the tech resurgence heading into Christmas.

REA has indeed fit the bill, seeing its shares soar 4.8% over the past month. Seek has also done well, edging up 4.73%.

The post 3 ASX 200 tech shares to buy now before the market wakes up: expert appeared first on The Motley Fool Australia.

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More reading

• Why are ASX tech shares having such a cracking run on Thursday?
• Analysts name the ASX tech shares to buy right now
• Experts say these ASX 200 blue chip shares are buys
• Here are the top 10 ASX 200 shares today
• I’d aim for $1 million in retirement buying just 10 ASX 200 shares

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

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The ASX share market revival over the past few weeks is not only great for our portfolios, but is a psychological relief.

You can stick to a long-term mindset but it is still human nature to feel depressed seeing a sea of red on the stockbroking dashboard.

Gerrish told his Market Matters newsletter that the most recent leg-up has quietened the cynics.

“There have been plenty of non-believers in equities over the last 12 to 18 months but the reality is, when we include dividends, the market is only 0.7% below its all-time high,” he said.

“Where’s the bear market?”

The past week, according to Gerrish, had seen a “risk-on” mindset return “with a bang” after US Federal Reserve chair Jerome Powell made comments interpreted as dovish.

His team noticed three ASX shares in particular that had piqued their interest as investors rediscover their enthusiasm:

Take the extra shares

Copper producer Sandfire Resources Ltd (ASX: SFR) is almost the last man standing after rival OZ Minerals Limited (ASX: OZL) last month agreed to be absorbed into BHP Group Ltd (ASX: BHP).

Sandfire shares are thus up a stunning 47% over the past month.

Gerrish’s team is still “long and bullish” on Sandfire, while noting the current stock purchase offer to existing investors.

“We still have a week to apply for the entitlement to Sandfire shares at $4.30, significantly below where the stock closed yesterday,” he said.

“Hence it’s highly likely that Market Matters will be taking the extra shares.”

Gold, gold, gold for Australia

Gerrish’s team is also keen on the gold market.

For example, the Ramelius Resources Limited (ASX: RMS) share price has rocketed up close to 15% over the past few days.

“If we are correct, both Ramelius and the gold sector have further to rally.”

This ASX 200 share has already rallied an amazing 65% since mid-October to close Friday at 99 cents.

Gerrish reckons there’s more to come, though.

“We feel at least the next 20% looks set to be on the upside,” he said.

“We think Ramelius can now rally towards the $1.13 initial resistance following Jerome Powell’s dovish statement.”

The post ‘Long & bullish’: Expert picks 2 ASX shares to buy as investors flock back to market appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• This ultra-high-yield ASX dividend share is up 18% in a month. Is it too late to buy?
• Here are the top 10 ASX 200 shares today
• Climate and energy: Analyst tips 2 ASX shares perfectly placed for global crises
• BHP’s bargain? Expert thinks its ASX 200 takeover target could be worth 40% more

Motley Fool contributor Tony Yoo 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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If you’re wanting to boost your income with some ASX dividend shares, then you might want to look at the two listed below.

These dividend shares have recently been named as buys by brokers and tipped to provide investors with attractive dividend yields. Here’s what you need to know about these dividend shares:

Accent Group Ltd (ASX: AX1)

This footwear and youth apparel retailer could be a dividend share to buy.

This is thanks to its strong market position and exposure to younger consumers. The latter is well-placed to keep spending in the current environment due to a rise in the minimum wage.

Goldman Sachs expects this to be the case and recently put a buy rating and $2.20 price target on the company’s shares.

As for dividends, Goldman is expecting fully franked dividends of 10.2 cents per share in FY 2023 and 11.4 cents per share in FY 2024. Based on the current Accent share price of $1.77, this will mean yields of 5.75% and 6.45%, respectively.

Telstra Corporation Ltd (ASX: TLS)

Income investors may also want to consider buying this telco giant’s shares.

Thanks to its successful turnaround via the T22 strategy and its ongoing restructure, it has been tipped as a dividend share to buy by analysts at Morgans.

They believe the market is undervaluing some of Telstra’s assets and expect its restructure to unlock value for shareholders. As a result, the broker has put an add rating and $4.60 price target on the company’s shares.

In respect to dividends, the broker is expecting Telstra to continue to pay fully franked 16.5 cents per share dividends in both FY 2023 and FY 2024. Based on the current Telstra share price of $4.00 this equates to yields of 4.1%.

The post Buy Telstra and this ASX dividend share: experts appeared first on The Motley Fool Australia.

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More reading

• Here are 2 of the best ASX dividend shares to buy: Morgans
• Rebound: I’m finding cheap ASX shares to buy before it’s too late!
• Can the Telstra share price finish 2022 with a bang in December?
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Boost your retirement income with these ASX dividend shares: analysts

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 positions in and has recommended Telstra Group. The Motley Fool Australia has recommended Accent Group. 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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On Friday, the S&P/ASX 200 Index (ASX: XJO) finished the week in a disappointing fashion. The benchmark index tumbled 0.7% to 7,301.5 points.

Will the market be able to bounce back from this on Monday? Here are five things to watch:

ASX 200 expected to rise

The Australian share market looks set to rebound on Monday despite a mixed finish to the week on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 19 points or 0.25% higher this morning. On Wall Street, the Dow Jones was up 0.1%, the S&P 500 was flat, and the NASDAQ dropped 0.2%.

Oil prices drop

ASX 200 energy shares Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) could have a subdued start to the week after oil prices dropped on Friday night. According to Bloomberg, the WTI crude oil price was down 1.5% to US$79.98 a barrel and the Brent crude oil price fell 1.5% to US$85.57 a barrel. At the weekend, OPEC met and decided to maintain previously planned production cuts of 2 million barrels per day.

ASX 200 rebalance

S&P Dow Jones Indices has announced a single change to the S&P/ASX 200 index, effective prior to the open of trading on December 19, as a result of the December quarterly review. That change will see gold miner St Barbara Ltd (ASX: SBM) dumped from the index and engineering company Monadelphous Group Limited (ASX: MND) replace it. In other news, Pilbara Minerals Ltd (ASX: PLS) has been added to the illustrious ASX 50 index.

Metcash results

The Metcash Limited (ASX: MTS) share price will be on watch on Monday when the wholesale distributor releases its half year results. The market will be looking for sales growth in the region of 7.7%, which is in line with what was reported at its investor day event in October.

Gold price edges lower

Gold miners such as Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could have a soft start to the week after the gold price edged lower on Friday. According to CNBC, the spot gold price was down 0.3% to US$1,809.6 an ounce during the session. The gold price retreated from close to a four-month high following the release of US jobs data.

The post 5 things to watch on the ASX 200 on Monday appeared first on The Motley Fool Australia.

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More reading

• What happened with the Woodside share price in November?
• Can the Pilbara Minerals share price regain its lustre in December?
• Here are the top 10 ASX 200 shares today
• Why Bigtincan, Bubs, St Barbara, and Warrego shares are charging higher
• Here are the 3 most heavily traded ASX 200 shares 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 recommended Metcash. 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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Three ASX lithium shares had a tough run in November. However, two of these shares have made gains in the year to date.

Looking at their share price movements during the month, Piedmont Lithium Inc (ASX: PLL) shares fell 13.54%, Leo Lithium Ltd (ASX: LLL) shares dropped 11.29%, while Anson Resources Ltd (ASX: ASN) shares plunged 25.81%.

Let’s take a look at each of these ASX lithium shares in more detail.

Piedmont Lithium

Piedmont is aiming to become a “leading American producer of lithium hydroxide” produced from spodumene concentrate. On 2 November, Piedmont released a corporate presentation to the market.

On 16 November, Piedmont advised Sayona Mining Ltd (ASX: SYA) had entered a strategic acquisition and earn-in agreement with Jourdan Resources Inc (TSXV: JOR) for 48 claims of the Vallee Lithium Project. Piedmont has a 25% stake in the project.

Commenting on this news, Piedmont Lithium CEO and president Keith Phillips said:

The claims of the Vallee Lithium Project represent the potential to extend or expand North American Lithium (NAL_ operations over time. At this time, we remain focused on near-term production of spodumene concentrate as NAL advances toward the restart target of H1 2023.

Piedmont Lithium shares may have fallen in November, but they have gained nearly 12% overall year to date. The company is also listed in the United States under the ticker (NASDAQ: PLL).

Anson Resources

Anson Resources is developing the Paradox Lithium Project in Utah, USA. The company is exploring lithium and NaBr from this project.

Anson announced a major upgrade to its mineral resource estimate for the Paradox project in November. The new upgraded resource is:

• 1,037,900t of Lithium Carbonate Equivalent (LCE) and 5.27Mt of Bromine

Commenting on the news, the company said:

The delivery of the mineral resource upgrade represents another significant achievement in the
development pathway of the Project.

Anson shares have soared 70% in the year to date and a mammoth 92% in the last year.

Leo Lithium

Leo Lithium is developing the Goulamina Lithium Project in Mali, West Africa.

On 15 November, Leo Lithium advised it has signed a port services agreement to export spodumene concentrate produced at the Goulamina Lithium Project.

On 28 November, Leo Lithium advised Ron Chamberlain has been appointed chief financial officer and joint company secretary. Commenting on this news, Leo Lithium managing director Simon Hay said:

Ron’s experience in projects and operations in a global setting including Africa will be a real asset to Leo.

Despite falling in November overall, the company’s shares have soared 17% since market close on 28 November.

The post What were the 3 worst-performing ASX lithium shares in November? appeared first on The Motley Fool Australia.

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More reading

• 2 ASX lithium shares to buy, and 3 to sell: brokers
• Ainsworth Game Tech, BHP, Fisher & Paykel, and Leo Lithium shares are charging higher
• Why did the Sayona Mining share price have a tough run today?
• Ex-Tesla Australia boss faces 15 years’ jail for insider trading ASX lithium shares

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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S&P/ASX 200 Index (ASX: XJO) shares have gone through a lot this year. Volatility has picked up, and plenty of ASX 200 shares are trading at lower prices than they were at the start of the year. But this could be a good time to buy ASX shares, in my opinion.

I believe it makes sense to buy assets at a cheaper price. And I think some ASX shares that have dropped in price heavily could be on track for a rebound.

However, it’s important not to anchor to past share prices. Just because something was previously at a share price of $30 doesn’t mean it will get back there any time soon.

Looking specifically at ASX 200 shares that have been sold down but could rebound nicely in the medium term, I like the look of these:

Pinnacle Investment Management Group Ltd (ASX: PNI)

I’d invest $10,000 into Pinnacle shares. If the (ASX 200) share market does indeed rally in 2023, then I think this financial services company is well-placed to benefit. It’s invested in a number of fund managers, so a rise in share prices would be a natural boost to underlying funds under management (FUM) and profitability, and presumably the Pinnacle share price.

I think the business can continue to attract more high-quality fund managers to its stable by offering its services, with areas like legal, compliance, distribution capabilities and seed capital. I’m excited by its potential to grow with overseas managers.

The Pinnacle share price has dropped 40% in 2022, and it’s priced at 18x FY24’s estimated earnings, according to estimates on CMC Markets. I think this price is reasonable, considering the earnings growth rate in the long term could rebound nicely once asset prices aren’t declining.

Breville Group Ltd (ASX: BRG)

I’d invest $4,000 into Breville shares.

The kitchen appliance maker was one of the beneficiaries during COVID-19 as more people spent time at home. But now, investor sentiment has gone into reverse. The Breville share price has dropped by 37% in 2022 to date.

But, even if demand reduces in 2023, I think the company has long-term potential as it enters new markets, launches new products and makes the occasional acquisition.

I think this ASX 200 share is one of Australia’s global success stories. A return to normal supply chain conditions and improving logistics costs can help Breville’s profit margins.

At this lower price, I think it now represents compelling long-term value. According to CMC Markets, it’s valued at 22x FY24’s estimated earnings.

Goodman Group (ASX: GMG)

I’d invest $6,000 into Goodman shares.

I think that Goodman is one of the best property businesses on the ASX. It owns, develops and manages industrial property estates. In addition, the company indirectly benefits the strong demand for logistics and warehouse real estate.

The Goodman share price has sunk more than 30% in 2022, so I think the value looks much more reasonable now.

In Goodman’s FY23 first quarter update, it said that its portfolio occupancy was 99% with a 12-month rolling like-for-like net income growth of 4%. Plus, it had $13.8 billion of development work in progress across 85 projects, which suggests a lot of future rental income in the works.

The ASX 200 share is still expecting operating earnings per security (EPS) to grow by 11% in FY23, which would be a solid increase, in my opinion.

I think that ongoing demand for well-located properties that can improve productivity for customers can lead to good rental growth.

The post How I’d invest $20k in ASX 200 shares in 2023 to capitalise on the stock market rally appeared first on The Motley Fool Australia.

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More reading

• Buy this cheap ASX 200 share with ‘the best property balance sheet on the market’: fundie
• Growth is back: 3 ASX shares to buy now for a 2023 re-rate
• Here are the top 10 ASX 200 shares today
• 2 high quality blue chip ASX 200 shares named as buys by analysts
• Here are the 10 most shorted ASX shares

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Pinnacle Investment Management Group. The Motley Fool Australia has positions in and has recommended Pinnacle Investment Management Group. 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 has been a strong performer over the past 12 months. And in November, the S&P/ASX 200 Index (ASX: XJO) oil and gas stock gained another 3.6%.

The first part of November saw the Woodside share price largely trending higher, while shares dipped over the latter weeks.

Here’s why…

What were ASX 200 energy investors eyeing in November?

The Woodside share price enjoyed some healthy tailwinds from a rebounding oil price in the first part of November.

On the back of what looked to be resurgent demand from China, Brent crude oil leapt from US$95 per barrel on 1 November to US$99 per barrel by 10 November.

The rising energy prices also saw the Woodside mark an eight-year intraday high, with the stock swapping hands for $39.58 per share on 9 November.

Oil prices headed the other way in the latter part of November, dropping to US$85 per barrel by the end of the month. This saw more investors hitting the sell button, pressuring the energy stock.

On 29 November, the Woodside share price dipped again after the company released its FY23 guidance, though shares gained the following day.

In its first full year of production since its petroleum transaction with BHP Group Ltd (ASX: BHP), Woodside forecast production of 180 – 190 million barrels of oil equivalent (MMboe). That was lower than consensus expectations.

And as my Fool colleague James pointed out on the day, “Woodside recently delivered third-quarter production of 51.2 MMboe, which annualises to 204.8 MMboe.”

The company’s production guidance came in well below that annualised quarterly figure.

Woodside share price snapshot

Despite some ups and downs, the Woodside share price has gained an impressive 69% over the past 12 months. That compares to a full-year gain of 1% posted by the ASX 200.

The post What happened with the Woodside share price in November? appeared first on The Motley Fool Australia.

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• Could our dividends now be too reliant on ASX 200 oil shares?
• Why is the Woodside share price on the slide today?
• 5 things to watch on the ASX 200 on Friday
• Why CogState, Downer, Temple & Webster, and Woodside shares are dropping
• Woodside share price falls as the ASX 200 giant targets 4% annual growth

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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Looking for an ASX dividend share or two to buy? Two that analysts at Morgans rate as buys and have on their best ideas list in December are listed below.

Here’s what the broker is saying about them:

Macquarie Group Ltd (ASX: MQG)

This investment bank remains a top pick for Morgans. The broker believes Macquarie is well-placed for the long term thanks partly to structural drivers. It commented:

We continue to like MQG’s exposure to long-term structural growth areas such as infrastructure and renewables. The company also stands to benefit from recent market volatility through its trading businesses, while it continues to gain market share in Australian mortgages.

Morgans is expecting the investment bank to pay partially franked dividends of 705 cents per share in FY 2023 and 736 cents per share in FY 2024. Based on the current Macquarie share price of $180.24, this implies yields of 3.9% and 4.1%, respectively.

The broker also sees plenty of upside for its shares with its add rating and $214.30 price target.

Telstra Corporation Ltd (ASX: TLS)

Morgans also has this telco giant on its best ideas list.

This is due partly to its successful turnaround. The broker also believes that Telstra’s recent restructure could unlock value for shareholders. It explained:

After a major turnaround, TLS has emerged in good shape with strong earnings momentum and a strong balance sheet. In late CY22 shareholders vote[d] on Telstra’s legal restructure, which opens the door for value to be released. TLS currently trades on ~7x EV/EBITDA. However some of TLS’s high quality long life assets like InfraCo are worth substantially more, in our view. We don’t think this is in the price so see it as value generating for TLS shareholders. This, free option, combined with likely reputational damage to its closest peer, following a major cybersecurity incident, means TLS looks well placed for the year ahead.

As for dividends, it continues to forecast fully franked 16.5 cents per share dividends in FY 2023 and FY 2024. Based on the current Telstra share price of $4.00, this implies yields of 4.1%.

Morgans has an add rating and $4.60 price target on Telstra’s shares.

The post Here are 2 of the best ASX dividend shares to buy: Morgans appeared first on The Motley Fool Australia.

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More reading

• Can the Telstra share price finish 2022 with a bang in December?
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Why did Telstra have a mediocre performance in November?
• Positive view on Macquarie shares ‘would seem obvious’: fundie
• ‘Back a winner’: Expert names his 3 best ASX shares for 2023

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 positions in and has recommended Telstra Group. The Motley Fool Australia has recommended Macquarie Group. 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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Last week saw a number of broker notes hitting the wires once again. Three buy ratings that investors might want to be aware of are summarised below.

Here’s why brokers think investors ought to buy them next week:

Temple & Webster Group Ltd (ASX: TPW)

According to a note out of Goldman Sachs, its analysts have retained their buy rating but trimmed their price target on this online furniture retailer’s shares to $7.50. This follows the release of a trading update which revealed that its performance has improved since early in the financial year. In light of this, the broker remains positive on the future and expects annual double-digit operating earnings growth over the next decade.  The Temple & Webster share price was trading at $4.99 on Friday.

Whitehaven Coal Ltd (ASX: WHC)

A note out of Bell Potter reveals that its analysts have upgraded this coal miner’s shares to a buy rating with an $11.00 price target. The broker has upgraded Whitehaven Coal’s shares to reflect its very strong near term earnings and dividend outlook thanks to high coal prices. It highlights that this is being underpinned by upside risk to pricing across the energy complex in the northern hemisphere winter, exacerbated by sanctions on Russian supply. The Whitehaven Coal share price was fetching $9.74 at the end of the week.

Xero Limited (ASX: XRO)

Analysts at Bell Potter have reiterated their buy rating and $97.90 price target on this cloud accounting platform provider’s shares. This follows the release of the first quarter update from rival Intuit. That update revealed softness in the Australian market for the QuickBooks product. In addition, it notes that Intuit commented that it believes that digitisation rather than macro remains the key driver for cloud accounting. This bodes well for Xero in the current economic environment. The Xero share price ended the week at $75.15.

The post Top brokers name 3 ASX shares to buy next week appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Temple & Webster Group and Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool Australia has recommended Temple & Webster Group. 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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On Tuesday, the Reserve Bank of Australia (RBA) is holding its final cash rate meeting of the year.

With inflation beginning to show signs of easing, the market appears to believe that oversized rate hikes are now a thing of the past. In fact, some even believe that periodic monthly hikes may also be nearing an end.

But what are economists saying about next week’s meeting?

Westpac is tipping another increase

The economics team at Westpac Banking Corp (ASX: WBC) believe the central bank will raise rates by 0.25% next week. This will take the cash rate from 2.85% to 3.1%.

According to its latest weekly economics report, Westpac’s chief economist, Bill Evans, believes this would be “consistent” action, which is something the RBA is aiming for. He commented:

The Minutes of the November meeting revealed a new guideline for monetary policy, “acting consistently would support confidence in the monetary policy framework.”

Having unexpectedly pivoted from increments of 50 basis points to 25 basis points in October moving back to 50 would not have been a “consistent” action. The motive of “consistency” does seem to be at cross purposes with the core policy of “[t]he size and timing of future interest rate increases will continue to be determined by the incoming data.”

A third 25 basis point lift in December would certainly be “consistent”.

However, Evans does highlight that the market isn’t as confident as it was about this rate hike. He added:

Markets are pricing around a 75% probability of that 25 basis point move. That is down from over 90% a week ago.

Up until the precedent of the October move even a 75% probability in pricing from the market would be seen as consistent with an almost certain such move in December. But markets had a 90% probability of a 50 basis point move in October and the Board settled on 25. That puts markets on edge that the Board can spring “surprises” and may explain why pricing is so tentative for December.

Market is too dovish

Evans also believes the market is being too dovish on its interest rates estimates and is concerned that things could get very bad if the RBA only delivers on market expectations. He explained:

The RBA’s biggest risk with behaving in line with current market pricing for the first half of 2023 is that these forces, along with businesses’ recent successful experience in raising prices (75% of CPI components growing faster than 3% annualised in the September quarter) and evidence of a broadening of wage pressures is that an early pause risks this inflation psychology becoming embedded in the Australian economy.

That would see an unsatisfactory pace of inflation in 2023 and 2024 which would preclude the RBA from providing some rate relief to a weak economy in 2024. The policy of least regret, which appears to be a clear strategy in other jurisdictions, whereby the choice of short–term weakness over long term embedded inflation should also be embraced by the RBA. That would certainly not include pausing in December or February.

The post Will the RBA raise rates again next week? Here’s what Westpac expects appeared first on The Motley Fool Australia.

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• Buy Westpac and this ASX dividend share: broker
• Why did the Westpac share price lag the ASX 200 in November?
• The 3 best-performing ASX 200 bank shares in November revealed
• The 10 ASX 200 shares responsible for 60% of all Aussie dividends last quarter
• If you bought $20,000 worth of Westpac shares this year, here’s how much dividend income you’d have

Motley Fool contributor James Mickleboro has positions in Westpac Banking. 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 Westpac Banking. 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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