Aussie investors have another reason to keep a close eye on overseas markets on Thursday.

The US Federal Reserve has raised interest rates for the first time since July 2023, lifting its benchmark rate by 25 basis points to between 3.75% and 4%.

The hike itself wasn’t a huge surprise, but Wall Street didn’t exactly love what came next.

US shares started slipping as Fed chair Kevin Warsh spoke after the decision.

By the close, the Dow Jones Industrial Average Index (DJX: .DJI) had fallen 631 points, or 1.21%, while the S&P 500 Index (SP: .INX) dropped 0.45%. The Nasdaq Composite Index (NASDAQ: .IXIC) finished almost flat, down 0.01%.

And now some of that weakness looks set to follow us home.

The S&P/ASX 200 Index (ASX: XJO) futures are currently pointing around 0.7% lower ahead of today’s open.

Why did the Fed raise rates?

The Fed didn’t have much disagreement on this one, with all 12 voting members backing the increase.

According to the Fed, the US economy is still moving along at a “solid pace”, with domestic spending holding up, productivity growth remaining strong and unemployment little changed.

Inflation, though, is still sitting above the Fed’s 2% target.

Warsh made that pretty clear after the decision, saying inflation was still too high and had stayed there for too long.

That sent bond yields higher.

The US 10-year Treasury yield moved back above 5%, finishing around that level for the first time since 2007.

Why did Wall Street fall?

Once the first hike was out of the way, attention quickly moved to what the Fed might do next.

The Fed’s updated projections put the median federal funds rate at 4.1% by the end of 2026.

Reuters reported that 16 of 18 policymakers expect at least one more increase before the year is out.

The US dollar also strengthened after the decision, while the Australian dollar slipped below US 71 cents against the greenback overnight.

What does this mean for the ASX?

For me, today’s open probably isn’t the main thing to focus on.

A weaker start would be pretty understandable after Wall Street’s reaction overnight.

What I’d rather watch is whether the ASX can settle down once trading gets underway, or whether the selling keeps building through the session.

Another US rate hike is still possible before the end of the year, so the Fed could remain a factor for ASX investors over the coming months.

The post The Fed just hiked rates for the first time in 3 years. What does it mean for ASX investors? appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras 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.

Nanosonics Ltd (ASX: NAN) shares have fallen almost 30% over the past year, but according to the team at RBC Capital Markets, they could be primed for a recovery.

The broking house has just released a new research report on the company and has assigned it an outperform rating and a bullish share price target, which I’ll get to shortly.

First, let’s look at the company’s most recent news – its FY26 financial results and the announcement of a share buyback.

Steady year, with core business performing well

Nanosonics’ main revenue-generating business at the moment is its Trophon division, which placed 4230 new units during the year, up 9%.

The company’s revenue was up 3% to $203.9 million, while EBIT was $16 million, down 10%.

If the Trophon division is looked at on a stand-alone basis, its EBIT would be $50.6 million.

The company had no debt and cash on hand of $155.2 million at the end of the year, having completed a $20 million buyback.

Nanosonics also announced a new, $40 million buyback for FY27.

Chief Executive Officer Michael Kavanagh said:

Nanosonics is entering a defining period of growth. FY26 demonstrated the strength of the business we have built: a proven Trophon franchise, disciplined financial execution and in FY27 we will progress the CORIS System from CMR to commercialisation. Trophon remains the economic engine for Nanosonics and an important foundation for future value creation. We delivered 6% revenue growth and 21% EBIT growth in constant currency. We achieved our strongest annual placement volume in three years, record upgrades in North America and expanded the cumulative installed base. We also launched trophon3 and trophon2 Plus, and saw accelerating adoption of these next generation technologies in the second half.

Mr Kavanagh said the CORIS system had the potential to establish a new standard of care in endoscope reprocessing and build a recurring revenue business over time.

He said the company planned to launch CORIS across the UK, Ireland, and Australia in the first half of FY27, with the US launch to follow.

Shares looking cheap, broker says

RBC Capital Markets said in their research note that the current Nanosonics share price “is implying an overly bearish scenario”.

They added:

NAN’s Trophon business improved its profitability with EBIT increasing from $47m in FY25 to $50m in FY26. While we expect Trophon capital sales will be negatively impacted by tariffs in higher freight costs, we expect absolute profitability to continue increasing in FY27 and are forecasting Trophon only EBIT of $54m (+8%). We value the Trophon only business at $3.55/share.

RBC has revised its forecasts to assume CORIS hits breakeven over the horizon period.

Its price target for Nanosonics shares has increased from $3 to $3.75, compared with a share price of $2.88 at the time of writing.

Nanosonics is valued at $836.9 million.

The post This ASX biotech could jump more than 30%, one broker says appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England 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 Nanosonics. The Motley Fool Australia has recommended Nanosonics. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Commonwealth Bank of Australia (ASX: CBA) is typically considered a cyclical stock, but its shares also have strong defensive qualities.

The business is the second-largest company on the S&P/ASX 200 Index (ASX: XJO), with a market capitalisation of $254 billion at the time of writing.

The banking giant has a strong operation performance too. 

In mid-August, CBA posted a 7% increase in cash NPAT and an 8% increase in statutory NPAT. Operating income also increased by 6.2%. CBA said it is the first time it has reported growth at or above system in each of its five core domestic product categories: home lending, business lending, consumer finance, household deposits, and business deposits.

Its large scale and strong operational performance also mean the company can often remain resilient through times of economic volatility, and its cyclical nature also means it can outperform during times of recovery.

And the bonus for shareholders is that this means the bank can pay a regular passive income.

But what exactly does that passive income look like?

Let’s take a look.

Where are CBA shares trading now?

At the time of writing, CBA shares are $151.62 a piece. The bank shares have had a relatively choppy start to the year, driven by interest rate movements and inflation concerns, but after each decline, the shares manage to bounce back. 

For the year to date, they’re down around 6% and roughly 10% lower than 12 months ago at the time of writing.

How many CBA shares can I buy for $10,000?

At the current share price of $151.62, a $10,000 investment will buy around 65 shares.

What dividend does the banking giant pay?

CBA has a long history of paying its shareholders regular fully-franked dividends dating back to 1992. These are typically paid out every six months, in March and September.

Last month, as part of its FY26 results announcement, the bank declared a $2.70-per-share fully-franked final dividend and a fully-franked full-year dividend of $5.05, up 20 cents. This is payable to shareholders on the 29th of September. That translates to a yield of around 3.3%.

Forecasts suggest the bank will pay its shareholders closer to $5.45 per share in FY27, and $5.30 per share in FY28.

At the time of writing, this translates to a forward dividend yield of roughly 3.6% for FY27. For FY28, the forward dividend yield is around 3.5%.

So, what passive income can I earn off a $10,000 investment?

I’ve crunched the numbers, using the estimated dividend payout figures above, to work out roughly how much passive income investors can expect from a $10,000 investment in CBA shares in FY27 and even beyond.

If the banking giant pays the expected $5.45 per-share dividend in FY27, your 65 shares would generate around $354.25 in passive income.

Assuming CBA then pays the forecasted $5.30 dividend in FY28, those 65 shares would generate around $344.40 in passive income for the year.

The post  If I invest $10,000 in CBA shares, how much passive income will I receive in FY27? appeared first on The Motley Fool Australia.

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Motley Fool contributor Samantha Menzies 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.