The Reserve Bank of Australia (RBA) has delivered a surprise interest rate hike at its policy meeting this afternoon. The official cash rate was lifted by 25 basis points to 3.85%.

The decision was announced at 2:30pm, catching parts of the market off guard after many economists had expected the RBA to hold rates.

The move marks the first increase in the cash rate since 2023 and signals a renewed focus on inflation, despite signs of slowing economic growth.

Why did the RBA lift rates?

In its post-meeting statement, the RBA pointed to persistently high inflation as the key driver behind today’s decision.

While headline inflation has eased from its peak, the RBA noted that underlying price pressures remain stronger than previously forecast. Services inflation in particular continues to run hot, supported by a tight labour market and resilient consumer demand.

The RBA warned that inflation is expected to remain materially above the 2% to 3% target band for longer. This prompted the Board to act pre-emptively to prevent inflation expectations becoming entrenched.

Governor Michele Bullock acknowledged that higher interest rates will place additional pressure on households, but argued that failing to act could ultimately require even more aggressive tightening later.

What does this mean for borrowers?

For mortgage holders, today’s decision is another hit to household budgets.

If banks pass on the full increase, a borrower with a $500,000 variable-rate mortgage could see repayments rise by roughly $80 per month. Larger loans will feel an even greater impact.

It also reinforces concerns that interest rates below 5% may not return anytime soon. That risk grows if inflation remains stickier than expected through 2026.

How did the share market react?

Australian shares dipped immediately following the announcement.

The S&P/ASX 200 Index (ASX: XJO) fell from 8,872 points to 8,846 points in the minutes after the RBA decision, as investors digested the implications of higher borrowing costs.

Despite the pullback, the benchmark index remains up around 0.8% for the day. This is being supported by strength earlier in the session across financials, resources, and energy stocks.

The relatively muted reaction suggests the market had partially priced in the risk of a rate hike.

What happens next?

Attention now turns to the RBA’s Statement on Monetary Policy, due later this week, which will provide updated forecasts for inflation, wages, and economic growth.

Markets will also be watching upcoming inflation and labour market data closely. If price pressures fail to ease as expected, today’s move may not be the last rate hike of this cycle.

The post RBA shocks borrowers with surprise rate hike to 3.85% appeared first on The Motley Fool Australia.

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• Why this ASX 200 share is a retiree’s dream
• Xero highlights AI progress and Melio momentum in US market update
• 5 things to watch on the ASX 200 on Tuesday

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.

Silver has recovered some ground following a sharp sell-off earlier this week.

At the time of writing, the price of silver has climbed back about 5%, trading around US$83 per ounce. This follows a huge plunge from its record highs that wiped out much of the gains achieved earlier in the year.

While the rebound has eased immediate pressure, trading remains volatile, and confidence has yet to fully return.

Let’s take a closer look.

What drove the recovery this week?

The rebound appears to be driven by a mix of calmer markets and bargain hunting.

After days of intense selling across commodities, markets have started to steady. Gold and other metals also moved higher, helping lift sentiment across the precious metals space.

Some traders stepped back into silver after prices fell sharply in a short period. Big drops like that often draw buyers looking for a quick rebound.

There was also less pressure from the US dollar. During the sell-off, a stronger dollar added to silver’s decline. However, as the dollar has now stabilised, some of that pressure has eased, giving silver room to bounce.

Is this a dead cat bounce or something more?

The market has yet to settle on a clear view.

Traders remain divided on whether the rebound signals renewed strength in silver or is simply a dead cat bounce after heavy selling.

Some remain cautious. A strong US dollar, expectations that interest rates stay higher, and reduced demand for safe-haven assets could limit how far silver recovers.

At the same time, silver continues to benefit from solid industrial demand. The metal is widely used in areas like solar panels and electronics, which helps provide underlying support.

Analysts who follow commodity markets say these longer-term drivers remain in place and could continue to support prices over time.

What about ASX–listed silver exposure?

Australian investors tracking silver gains have also seen price moves reflected in listed products.

The Global X Physical Silver Structured ETF (ASX: ETPMAG) is designed to deliver returns that generally match silver’s spot price in Australian dollars.

Backed by physical silver held in a vault, ETPMAG has also rebounded strongly, up around 5.93% to about $110.

Foolish Takeaway

Silver’s rebound looks encouraging after a steep fall, but it may be too early to call it a full recovery.

Sharp bounces often follow sharp sell-offs, especially in volatile markets. Whether the rebound holds will depend on price action around recent lows, the US dollar’s direction, and upcoming central bank signals.

The post Silver rebounds 5%. Is this a dead cat bounce or a recovery? appeared first on The Motley Fool Australia.

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• These were the 10 most traded Australian shares last week
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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.

The S&P/ASX 200 Index (ASX: XJO) was enjoying a strong day on Tuesday.

At 2:30pm AEDT, the benchmark Aussie index was up 1.1% at 8,872.8 points.

As you’re likely aware, that’s right when the Reserve Bank of Australia announced its latest interest rate decision.

In its first meeting of 2026, the RBA decided to increase the official cash rate by 0.25% to the new 3.85%.

With market expectations of an interest rate hike having increased to 72% heading into today’s announcement amid resurgent inflation, ASX 200 investors are taking the news better than might have been expected.

At time of writing, the benchmark index remains up 0.7% for the day, having tumbled 0.4% in the minutes following the RBA’s announcement.

Here’s what Australia’s central bank just reported.

ASX 200 slips as RBA boosts interest rates

The RBA board noted that while inflation has come down substantially since its peak in 2022, inflation “picked up materially” in the second half of 2025.

Explaining the decision to lift rates that’s weighing on the ASX 200 today, the RBA said:

The board has been closely monitoring the economy and judges that some of the increase in inflation reflects greater capacity pressures. As a result, the Board considers that inflation is likely to remain above target for some time.

As for those capacity pressures, the board acknowledged that the private demand growth has “substantially” exceeded its expectations. Private demand growth is being driven by both household spending and investment.

And the central bank’s inflation battle isn’t being aided by housing prices, which have continued to pick up.

The RBA also highlighted the lag time between its previous rate cuts and the impact on inflation.

“Credit is readily available to both households and businesses and the effects of earlier interest rate reductions are yet to flow through fully to aggregate demand, prices and wages,” the board said.

And, while good news for Aussie workers, ongoing tightness in the labour market could also continue to put upward pressure on prices and delay any rate relief for mortgage holders and ASX 200 investors.

According to the board:

The unemployment rate has been a little lower than expected and measures of labour underutilisation remain at low rates. Growth in the Wage Price Index has eased from its peak, but broader measures of wages growth continue to be strong and growth in unit labour costs remains high.

Connecting the dots, the RBA concluded, “The board judged that inflation is likely to remain above target for some time and it was appropriate to increase the cash rate target.”

With today’s intraday gains factored in, the ASX 200 is up 5.5% over 12 months.

The post ASX 200 investors flinch as RBA pulls the trigger on higher interest rates appeared first on The Motley Fool Australia.

More reading

• RBA shocks borrowers with surprise rate hike to 3.85%
• Atlas Arteria maintains distribution guidance while French tax extended
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• 5 things to watch on the ASX 200 on Tuesday

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.

Despite the horror final week, DroneShield Ltd (ASX: DRO) shares managed to cap off a solid run in January.

In the first month of 2026, the S&P/ASX 200 Index (ASX: XJO) gained a solid 1.8%.

As for DroneShield, the ASX 200 drone defence company closed on 31 December trading for $3.08 a share. When the closing bell sounded on 30 January, shares were changing hands for $3.32 apiece.

This saw the drone defence stock up 7.8% for the month, flying ahead of the benchmark.

As for that horror final week, things were tracking far better at the close on 22 January, when DroneShield shares were trading for $4.73 each.

Amid broader weakness in growth stocks and the company scaling back its forecast sales pipeline, the share tumbled a painful 29.8% over the last week of January.

Here’s what’s been happening.

DroneShield shares rocket in first three weeks of 2026

DroneShield shares surged 53.6% in the first three weeks of January without any fresh company-specific news being released.

Investors likely had an eye on the ongoing conflict in Ukraine, alongside renewed rising tensions in the Middle East, spurred by unrest in Iran and the nation’s dubious nuclear ambitions. Drones and counter-drone technologies are increasingly being used in both conflict areas.

And in the United States, President Donald Trump caught global attention when he pushed for a US$1.5 trillion dollar defence budget in 2027. That’s up some US$500 billion from the nation’s 2026 defence budget. That’s a whole lot of zeros after those dollar signs, some of which will be allotted to drone defences.

ASX 200 defence stock takes a nosedive

DroneShield shares closed down 6.5% on 27 January, with even steeper falls over the following three trading days, following the release of the company’s December quarter update (Q4 2025).

Now, I thought the quarterly results were actually quite impressive.

Highlights included a 94% year-on-year increase in revenue to $51.3 million. And cash receipts from customers surged 142% to $63.5 million.

This helped the company achieve positive operating cash flow of $7.7 million, up from the $8.9 million loss reported for Q4 2024.

On the balance sheet, the ASX 200 defence stock had a cash balance of $210.4 million as at 31 December.

Despite these strong metrics, DroneShield shares look to have come under selling pressure after the company reduced its sales pipeline estimate to $2.1 billion, down from the prior estimate of $2.55 billion.

Europe makes up the bulk of that sales pipeline, with 66 projects valued at $1.3 billion. The US comes in at number two, with 127 projects valued at $303 million.

DroneShield CEO Oleg Vornik said the company had scaled back its previous assumptions on demand from the US civilian sector. He noted that potential customers, including airports and data centres, are still deciding how much they want to spend on drone defence.

The post How DroneShield shares soared ahead of the benchmark in January appeared first on The Motley Fool Australia.

More reading

• These 3 ASX 200 shares have soared over 200% in a year!
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• Why Droneshield’s future earnings matter more than ever
• Here are the top 10 ASX 200 shares today
• Why 4DMedical, DroneShield, New Hope, and Zip shares are pushing higher today

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 DroneShield. 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.

The S&P/ASX 200 Index (ASX: XJO) has climbed 1.12% in early afternoon trade on Tuesday. Over the year to date, the index has risen 1.71% and it’s 5.93% higher than this time last year. The index increase is decent, but some ASX shares have significantly outperformed.

Here are the top three performers over the past 12 months, and each of them has posted gains of over 200%!

Droneshield Ltd (ASX: DRO)

At the time of writing on Tuesday afternoon, Droneshield shares are up 6.52% to $3.68 a piece. That translates to a 10.36% year-to-date increase and has pushed the stock price a huge 492.74% above where it was this time last year.

The counter-drone technology company has been firmly in the spotlight over the past six months. Its share price spiked to an all-time high in October before crashing 74% over the next six weeks. The trading price is now 44% below that previous peak, but analysts are bullish that the ASX 200 company’s share price will keep on climbing this year.

The business is robust; it posted a strong quarterly result last week, and it has a fantastic growth strategy in place for 2026. 

The team at Bell Potter recently said that the company’s sales growth was stronger than it had expected, giving it a competitive advantage going forward. 

Resolute Mining Ltd (ASX: RSG)

Resolute Mining shares are 4.44% higher at $1.34 a piece at the time of writing. For the year to date, the shares are up 8.23% and they’re now an impressive 253.16% above trading levels this time 12 months ago.

The ASX 200 mining stock reached a seven-year high of $1.50 a piece late last week and delivered very strong fourth-quarter results the week prior. 

The robust results support the potential for more share price gains going forward, too. TradingView data shows analysts have a buy consensus on the shares, with a maximum target price of $250 a piece. That implies a potential 85.63% upside for investors at the time of writing. 

Westgold Resources Ltd (ASX: WGX)

The Westgold share price has climbed 1.08% in early afternoon trade on Tuesday. At the time of writing, the shares are changing hands at $7.08 each. For the year to date, the gold miner’s shares have climbed 9.69% and over the year, they’ve surged 213.05%.

The ASX 200 company and its shares have ridden the wave of the latest gold price rally. Meanwhile, the miner also revealed record gold production and doubling of its cash build for the December quarter. 

The team at RBC Capital Markets think Westgold shares have more room to run too. The broker gives the stock a buy rating with a price target of $7.80, which implies a potential 10.2% increase this year, at the time of writing. 

The post These 3 ASX 200 shares have soared over 200% in a year! appeared first on The Motley Fool Australia.

More reading

• These were the 10 most traded Australian shares last week
• Atlas Arteria maintains distribution guidance while French tax extended
• Why this ASX 200 share is a retiree’s dream
• Why Droneshield’s future earnings matter more than ever
• Xero highlights AI progress and Melio momentum in US market update

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 positions in and has recommended DroneShield. 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.

New Hope Corp Ltd (ASX: NHC) shares are edging lower today.

Shares in the S&P/ASX 200 Index (ASX: XJO) coal stock closed yesterday trading for $4.63. In afternoon trade on Tuesday, shares are changing hands for $4.62 apiece, down 0.2%.

Over the past month, New Hope shares have gained 13.3% amid a roughly 10% increase in coal prices. Thermal coal is trading for US$116 per tonne, near its highest level in 12 months.

Taking a step back, shares in the ASX 200 coal stock remain down 5.5% since this time last year. Though those losses will have been more than erased by the 34 cents a share in fully-franked dividends New Hope paid out over this time.

New Hope stock currently trades on a fully-franked trailing dividend yield of 7.4%.

Which brings us back to…

Why New Hope shares are tipped to outperform in 2026

Baker Young’s Toby Grimm recently ran his slide rule over the Aussie coal miner (courtesy of The Bull).

Citing the first reason he has a buy rating on New Hope shares, Grimm said, “The extension of Origin Energy’s Eraring coal fired power station is a reminder that demand for thermal coal is likely to remain robust for longer than many investors believe.”

Origin Energy Ltd (ASX: ORG) reported that extension on 20 January, noting it would extend the operation of all four units of the coal-fired power station from 19 August 2027 to 30 April 2029, “to support energy supply in NSW through the energy transition”.

Commenting on that decision, Origin CEO Frank Calabria said:

We’ve taken the decision to extend Eraring’s operations after assessing a range of factors, including the needs of our customers, market conditions and the important role the plant plays in the NSW energy system.

Among other reasons he’s positive on the stock, Baker Young’s Grimm also pointed to the strong growth New Hope reported at its latest quarterly results:

New Hope group saleable coal production of 2.7 million tonnes for the quarter ending October 31, 2025 was up 7.1% on the previous quarter. Underlying EBITDA [earnings before interest, tax, depreciation and amortisation] of $107.9 million for the quarter was up 15.5% on the prior quarter.

As for the third reason New Hope could outperform in the year ahead, Grimm said, “New Hope has a strong balance sheet, and we feel the market is undervaluing NHC’s growth potential through the New Acland stage 3 development.”

The new Acland stage 3 development is an approved expansion of New Hope’s thermal coal mine in Queensland.

And the fourth reason you might want to buy New Hope shares today, according to Grimm, “Recently trading on a modest forecast earnings multiple in fiscal year 2026 and an attractive fully franked dividend yield, the stock screens as attractive.”

The post Up 13% in a month, 4 reasons to buy New Hope shares today appeared first on The Motley Fool Australia.

More reading

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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.

Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) shares both raced ahead of the 1.8% gains delivered by the S&P/ASX 200 Index (ASX: XJO) in January. And one stock significantly outperformed the other.

Woodside closed out December trading for $23.59 a share. At market close on 30 January, shares were changing hands for $25.37 apiece. This saw Woodside shares up 7.6% for the month.

But Santos stockholders fared even better.

Santos shares closed on 31 December at $6.17 each. On 30 January, shares closed the day trading for $7.01 apiece, putting Santos shares up 13.6% for the first month of 2026.

Both ASX 200 energy shares enjoyed a strong uplift in global oil prices over the month.

Spurred by the United States military action in Venezuela and fears of a larger-scale conflict with Iran, the Brent crude oil price soared from US$60.75 per barrel on 2 January to US$70.69 per barrel on 30 January, up 16.4%.

Both ASX 200 energy shares also reported their quarterly results in January.

Here’s what grabbed investor interest.

Woodside shares gain on record full-year production

Woodside shares closed up 2.7% on 28 January following the release of the company’s December quarter update.

Investors reacted positively, with Woodside reporting all-time high production of 198.8 million barrels of oil equivalent (MMboe). That exceeded the company’s full-year guidance of 192MMboe to 197MMboe.

Woodside achieved that new milestone despite a 4% quarter-on-quarter fall in production to 48.9 MMboe.

And despite a year-on-year decline in average realised prices, Woodside’s full-year revenue of US$12.94 billion was in line with 2024.

On the major growth project front, the company reported its Scarborough Energy Project was 94% complete, with first LNG still targeted for Q4 2026. And Woodside’s Trion Project is now 50% complete, with first oil targeted in 2028.

Santos shares leap on free cash flow surge

Santos’ outperformance of Woodside shares in January was in part driven by an even more positive investor response to Santos’ own December quarterly update.

Santos shares closed up 5.3% on 22 January after the company reported a 5% quarter-on-quarter increase in production to 22.3 MMboe.

And Santos’ free cash flow from operations surged 30% from the September quarter to $380 million, with $1.23 billion in sales revenue up 9%.

As for Santos’ major growth projects, the Barossa LNG project commenced LNG production, with its first cargo loaded for delivery to Japan in January.

And drilling at the company’s Pikka phase 1 project in Alaska was reported to be nearing completion.

Santos and Woodside share price snapshot

Despite the strong run in January, Santos shares remain down 4% over the past 12 months (at the time of writing).

Woodside shares are up 1.8% over this same period.

The post Buying ASX energy shares? Here’s how Santos and Woodside shares stacked up in January 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.

The S&P/ASX 200 Index (ASX: XJO) is trading in the green at Tuesday lunchtime, up 1.21% at the time of writing. It’s a welcome uplift after Australian shares dropped 0.8% at the close of the index last week.

The index was largely affected by selling pressure among investors offloading their gold mining stocks. This was after the metal price slumped from its peak.

New data from CommSec reveals the Australian shares that were most traded by its clients last week, highlighting investor sentiment and market momentum.

Most traded Australian shares in the last week of January

CommSec’s data shows that Droneshield Ltd (ASX: DRO) continues to be a firm favourite among its clients. The drone operator’s shares were the most traded Australian stock between the 26th and 30th of January.

Droneshield shares have gathered a lot of attention recently. The company is making great progress, and its share price continues to recover following the price crash late last year.

The shares are now just 43.4% below their all-time high of $6.60 seen in October. Over the course of last week, 58% of Droneshield activity was investors buying, but 42% was investors selling up and taking some recent gains.

At the time of writing, Droneshield shares are up 8.41% for the day to $3.74 a piece. For the year to date, the shares are up 12.16%. Analysts widely rate the shares as a buy following the company’s strong quarterly update last week. 

Next on CommSec’s most traded Australian shares list are Global X Metal Securities Australia Ltd (ASX: ETPMAG) and BHP Group Ltd (ASX: BHP). 

The data shows that 69% of trades in the silver exchange-traded fund ETPMAG were purchases, after surging silver prices were thrust into the spotlight last week. Meanwhile, 65% of trades in the mining giant BHP were sales after the miner took the top spot as the largest stock on the ASX.

What else were investors interested in last week?

CommSec clients were also interested in Global X Physical Gold Structured (ASX: GOLD), 4DMedical Ltd (ASX: 4DX), PLS Group Ltd (ASX: PLS), WiseTech Global Ltd (ASX: WTC), Lynas Rare Earths Ltd (ASX: LYC), and Perth Mint Gold Structured Product (ASX: PMGOLD). Most activity for each of these shares was buying.

Appen Ltd (ASX: APX) shares also made the top 10 most traded shares list during the week, but the majority of activity (41%) was investor selling.

The post These were the 10 most traded Australian shares last week appeared first on The Motley Fool Australia.

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• Why Appen, Imricor, Qoria, and Xero shares are storming higher today
• Why Droneshield’s future earnings matter more than ever
• The growing case for critical minerals – Expert
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• Why this incredible ASX tech stock could be ‘set to conquer’

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 positions in and has recommended Appen, DroneShield, and WiseTech Global. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Lynas Rare Earths Ltd. The Motley Fool Australia has positions in and has recommended WiseTech Global. The Motley Fool Australia has recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX exchange-traded funds (ETFs) provide an easy-peasy way to invest in international shares via our local exchange.

US stocks are particularly popular given the S&P 500 Index (SP: INX) has outperformed the S&P/ASX 200 Index (ASX: XJO) for three years.

The two biggest ETFs by market capitalisation that provide exposure to the US market are iShares Core S&P 500 AUD ETF (ASX: IVV) and Vanguard MSCI Index International Shares ETF (ASX: VGS).

IVV ETF tracks the S&P 500, while VGS tracks the MSCI World ex-Australia (with net dividends reinvested) AUD Index.

About 70% of the VGS portfolio is US stocks.

Neither ETF has currency hedging, and this eroded returns for Aussie investors last year given the weaker USD against the AUD.

The Aussie dollar rose from about 62 US cents in January 2025 to about 67 US cents by December.

Our currency reached a three-year high of 71 US cents last month. It is 69.65 US cents at the time of writing.

The US dollar has been weakening due to expectations of US interest rate cuts, concern over the economic impact of new tariffs, and broader geopolitical and trade uncertainties.

Meanwhile, the AUD is stronger amid expectations of rate hikes in 2026 and strong demand for Australia’s commodities, particularly gold.

This extra demand supports our currency because foreign buyers must pay for our exports in Australian dollars.

Rising commodity prices amplify the total demand for the AUD even further.

With all this at play, should ASX ETF investors consider switching into, or buying, products with currency hedging to insulate their returns?

Vanguard’s take on currency hedging

Major ASX ETF provider Vanguard describes the pros and cons of hedging as follows:

For investors, a strengthening AUD would be a headwind for unhedged portfolios, reducing returns on international assets. 

Conversely, a weaker AUD boosts unhedged returns and benefits Australian companies earning profits overseas.

Vanguard says short-term volatility in currencies is inevitable, and hedging is more about managing long-term risk rather than chasing returns. 

Hedging is not a one-size-fits-all decision.

The choice should come after building a plan, setting an asset allocation and considering costs. 

The decision doesn’t have to be all-or-nothing either.

Many investors and their advisers aim for a “least regret” approach by hedging around 50% of the portfolio.

A word from Global X

Justin Lin, from ETF provider Global X, said foreign exchange and currency exposure has been front of mind for investors in recent times.

Lin says AUD currency-hedged ETFs are best viewed as “tools for short-term, tactical asset allocation rather than long-term buy and hold”.

Investors may want to consider tactical currency hedging when they expect significant fluctuations in exchange rates that could impact their returns.

For example, if interest rates are rising in their home country but decreasing or unchanged in the country where they hold investments.

In this scenario, the home currency may appreciate, reducing the value of their foreign investments.

Hedging options with ASX ETFs

Vanguard and other ETF providers offer currency-hedged versions of some of their most popular ASX exchange-traded funds.

For example, VGS is unhedged, while Vanguard MSCI Index International Shares (Hedged) ETF (ASX: VGAD) is its hedged counterpart.

Take a look at their performance in 2025.

As you can see, the percentage of price growth between VGS and VGAD widened over the year as the AUD strengthened against the USD.

So, VGAD did better.

Here’s another example.

Last year, the S&P 500 delivered total returns, including dividends, of 17.88%. However, IVV ETF investors received a total return of 10.75% due to the impact of the currency exchange.

The hedged version of IVV ETF is iShares S&P 500 (AUD Hedged) ETF (ASX: IHVV), which returned 16.88% (after fees).

As you can see below, IHVV began outperforming IVV in terms of the percentage of capital growth in April last year.

In the end, IHVV did best.

The post Should you consider currency-hedged ASX ETFs? appeared first on The Motley Fool Australia.

More reading

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Motley Fool contributor Bronwyn Allen has positions in Vanguard Msci Index International Shares ETF and iShares S&P 500 Aud Hedged ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended iShares S&P 500 ETF. The Motley Fool Australia has recommended Vanguard Msci Index International Shares ETF and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a strong gain. At the time of writing, the benchmark index is up 1.1% to 8,873 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are falling:

Brainchip Holdings Ltd (ASX: BRN)

The Brainchip share price is down 2% to 15.2 cents. This semiconductor company’s shares have been under heavy selling pressure since the release of another disappointing quarterly update. Despite entering the commercialisation stage a few years ago, Brainchip revealed cash receipts of just US$0.4 million for the three months ended 31 December. Given that its market capitalisation is still $350 million, it wouldn’t be surprising if the selling continues if there’s no meaningful improvement in its sales.

Credit Corp Group Ltd (ASX: CCP)

The Credit Corp share price is down over 15% to $12.07. Investors have been selling this debt collector’s shares following the release of its half-year results. Credit Corp posted a 4% increase in revenue to $283.6 million and flat net profit after tax of $44.1 million. Looking ahead, management believes it can still achieve its net profit after tax guidance range of $100 million to $110 million. Investors don’t appear confident it will get there.

Graincorp Ltd (ASX: GNC)

The Graincorp share price is down 3% to $6.00. This may have been driven by a broker note out of Macquarie Group Ltd (ASX: MQG). This morning, the broker downgraded the grain exporter’s shares to a neutral rating (from outperform) with a reduced price target of $6.60 (from $8.30). Macquarie appears concerned that margins could remain under pressure in the near term, which could weigh on its earnings growth.

Neuren Pharmaceuticals Ltd (ASX: NEU)

The Neuren Pharmaceuticals share price is down 12% to $14.25. This morning, Neuren Pharmaceuticals revealed that the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) has given a negative trend vote on its marketing authorisation application for trofinetide in the European market. Neuren’s CEO, Jon Pilcher, commented: “Given the totality of experience with trofinetide in clinical trials and real world use over many years, this negative trend vote is frustrating for us and the Rett syndrome community in the EU. We fully support Acadia’s intention to seek re-examination of the CHMP opinion in February, if necessary.”

The post Why Brainchip, Credit Corp, Graincorp, and Neuren shares are falling today appeared first on The Motley Fool Australia.

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• GrainCorp shares slide nearly 15%. Is this ASX 200 stock now oversold?

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 Macquarie Group. The Motley Fool Australia has positions in and 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.