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The Pendal Group Ltd (ASX: PDL) share price is having a difficult finish to the week.

In early afternoon trade, the fund manager’s shares are down almost 10% to a multi-year low of $3.69.

Why is the Pendal share price being sold off?

Investors have been selling down the Pendal share price today after the company released a disappointing funds under management (FUM) update.

According to the release, total FUM fell 11.1% during the third quarter of FY 2022 from $124.9 billion to $111 billion.

The weakness in its FUM was across the board, with its Australian, EUKA (Europe, UK, and Asia), and US funds all posting quarterly fund outflows.

Management advised that in the US there were outflows in US Pooled Funds, primarily in the International Select strategy, as clients reduced their exposure to growth-oriented international equities.

Whereas in the EUKA, flow pressure persisted in European and UK equities, and in Australia institutional outflows were primarily in fixed income.

Performance fees fall

In addition, the company revealed that for the 12 months to 30 June, its realised performance fees have generated $5.4 million in revenue.

This is down by two-thirds from realised performance fees of $16.4 million for the same period a year earlier.

Management commentary

Pendal’s CEO, Nick Good, revealed that the quarter was challenging. He said:

During the quarter there have been sustained market challenges. Global equity market volatility increased dramatically with rising inflation worries, ongoing concerns over geopolitical tensions, and fears of economic recession around the world due to aggressive tightening measures by major central banks.

This has resulted in client caution, which has driven fund redemptions, however flow trends improved in June and there was continued investment from St. James’s Place into the Global Opportunities strategy during the period. An additional $1.3 billion is expected to be funded by St. James’s Place in the September quarter.

As a result of current market conditions, we remain prudent and flexible in managing costs, focusing on building and strengthening our strategic growth areas. These include the development and expansion of our global distribution capability, the streamlining of the group’s global operating platform and adapting our product offerings to ensure ongoing and future relevance to our clients.

The post Pendal share price slumps 10% to multi-year low amid continued outflows appeared first on The Motley Fool Australia.

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More reading

• ASX 200 midday update: Rio Tinto’s update, BHP and Fortescue sink, AVZ remains suspended
• Here are 3 ASX 200 shares tumbling to new 52-week lows 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 Fortescue Metals Group Limited (ASX: FMG) share price is taking a beating today.

Fortescue shares closed yesterday at $17.41 and are currently trading for $16.43, down 5.6% after earlier posting losses of more than 6%.

That’s significantly more than the 1.5% loss posted by the S&P/ASX 200 Index (ASX: XJO) at this same time.

But it’s not just the Fortescue share price that’s underperforming today.

Rival ASX 200 miner BHP Group Ltd (ASX: BHP) shares are down 3.9%, and the Rio Tinto Limited (ASX: RIO) share price has also dropped 3.2%.

So, what’s going on?

Rising costs and falling prices

The Fortescue share price and shares of the other top iron ore focused miners look to be taking a hit on two fronts.

First, iron ore fell another 8.4% overnight, to just over US$100 per tonne. The industrial metal has been on a downward trend over the past 12 months. This time last year it was still fetching some US$220 per tonne.

While there are a few factors pressuring iron ore prices, a slowing Chinese economy is chief among them. The second biggest economy in the world also has the most voracious appetite for imported iron ore for its massive property and infrastructure projects.

But investors are worried that Chinese demand could fall significantly amid an already struggling economy that’s once again being hamstrung by COVID-19 lockdowns.

A poll of 50 economists conducted by Reuters indicates the Chinese economy only grew a tepid 1% in the April to June quarter from the previous year.

According to Nie Wen, an economist at Hwabao Trust:

The second-quarter GDP took another hit from COVID after 2020, although the downturn may not be as sharp as before. Going forward, the pace of recovery will not be as strong as in 2020 due to the lingering impact from COVID curbs, and exports and the property sector could be affected by external and internal factors.

That covers the falling prices dragging on the Fortescue share price today.

As for rising costs, investors may be tuning in to the cost warning reported by Rio this morning in the miner’s quarterly update.

As my Foolish colleague James Mickleboro reported:

[Rio] warned that higher rates of inflation have increased its closure liabilities and impacted its underlying earnings. In the first half, this resulted in increased charges of approximately US$400 million pre-tax within underlying earnings compared with the first half of 2021, including a US$300 million increase in amortisation of discount, with the remainder impacting underlying EBITDA.

Fortescue share price snapshot

With today’s falls factored in, the Fortescue share price is down 17% in 2022, trailing the 14% year-to-date losses posted by the ASX 200.

Longer-term, Fortescue shares are up an impressive 227% over five years.

The post Here’s why the Fortescue share price is falling 6% into the dirt today appeared first on The Motley Fool Australia.

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More reading

• These ASX 200 mining shares are getting buried. What’s happening?
• ASX 200 midday update: Rio Tinto’s update, BHP and Fortescue sink, AVZ remains suspended
• These ASX 200 mining shares are bolstering the market today
• Will the Fortescue share price ‘disappoint’ this reporting season?
• $264 million! The 10 highest-paid CEOs on the ASX

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

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The Regional Express Holdings Ltd (ASX: REX) share price is taking off on Friday with news the company is snapping up a leading fly-in, fly-out (FIFO) service provider.

Rex has agreed to acquire National Jet Express (NJE) – the regional services arm of Cobham Aviation Services Australia – for $48 million.

At the time of writing, the Rex share price is $1.27, 4.53% higher than its previous close.

Let’s take a closer look at the company’s previously speculated acquisition.

Rex announces $48m FIFO acquisition

The Rex share price is rejoicing during a disappointing day for most ASX shares after the regional and domestic airline announced a major acquisition.

The company, its joint venture partners, and its chair are joining forces to acquire NJE.

NJE is a leading provider of FIFO services in Western Australia and South Australia, operator of freight services between many of Australia’s capitals, and provides charter services to Papua New Guinea.

It brought in $142 million in revenue in 2021. The business also brings eight Bombardier Q400 turboprops and six Embraer E190 jets to the table.

The Rex share price had been frozen since Tuesday as the company prepared to announce its latest acquisition.

Rex executive chair Lim Kim Hai said the “completely modern fleet” represents greater fuel efficiency, operational reliability, and lower emissions than competing FIFO airlines. He continued:

With this acquisition, Rex will have a FIFO arm that is simply unparalleled in Australia.

NJE will naturally be the partner of choice for resource companies all over Australia who have been crying out for so long for a FIFO provider that is able to address their triple priorities of minimal impact on the environment, comfort and safety of its staff, and reliability of service.

Rex will fund 50% of NJE’s purchase price, drawing an extra $15 million under its debt facilities to do so. The remaining 50% will come from its joint venture partners, one of whom is Rex’s chair.

The company’s chair will be putting their private funds towards the acquisition. They will convert that debt funding to issued new shares in NJE to reduce Rex’s debt burden.

The joint venture is also planning to modernise the business’ aircraft and technology offerings to expand its FIFO services into Queensland and the Northern Territory.

Rex share price snapshot

Today’s gain hasn’t been enough to boost the Rex share price into the longer-term green.

The airline’s stock is currently around 10% lower than it was at the start of 2022. Though, it has gained 5% over the last 12 months.

The post ‘Simply unparalleled’: Rex share price defies downturn on FIFO acquisition appeared first on The Motley Fool Australia.

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More reading

• Why is the Regional Express share price in a trading halt today?
• Regional Express shares hold steady amid response to fly-in fly-out takeover speculation
• Why this smaller ASX travel share is locking horns with Qantas over regulation
• These 2 ASX travel shares are tying the knot for the next 10 years

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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S&P/ASX 200 Index (ASX: XJO) mining shares are having a tough end to the week.

At the time of writing, the BHP Group Ltd (ASX: BHP) share price is down 3.9%, Fortescue Metals Group Limited (ASX: FMG) shares are down 5.7%, while the Rio Tinto Limited (ASX: RIO) share price is down 2.6%.

Other heavy declines include the Chalice Mining Ltd (ASX: CHN) share price falling 5.5%, the Sandfire Resources Ltd (ASX: SFR) share price losing 4.5%, and the Nickel Industries Ltd (ASX: NIC) share price sinking 5.1%.

In summary, it’s a rough day for ASX 200 mining shares.

What’s happening to ASX 200 mining shares?

Sometimes volatility is unexplainable. But there could be a couple of reasons to explain what’s going on today.

The ASX’s largest players often follow the movements of what has happened in international share markets.

For example, the BHP Group Ltd (NYSE: BHP) share price dropped 4% overnight on the New York Stock Exchange. while the Rio Tinto plc (NYSE: RIO) share price fell almost 6% on the NYSE.

So, perhaps it is unsurprising that the ASX-listed shares of these names have dropped as well.

Respected media outlets are suggesting that weakness in China could be the cause of this latest sell-off.

Bloomberg has reported that some Chinese home buyers are no longer paying mortgage repayments on at least 100 projects that have stalled in more than 50 cities, according to researcher China Real Estate Information Corp, while share prices of Chinese banks have dropped on worries that bad debts could rise. Lockdowns to slow the spread of COVID-19 haven’t helped the economy.

Bloomberg reported on comments made by Betty Wang, a senior economist at Australia and New Zealand Banking Group Ltd (ASX: ANZ):

If more home buyers cease payment, the spreading trend will not only threaten the health of the financial system but also create social issues amid the current economic downturn.

It was noted by the media outlet that the worsening picture for construction in China is punishing the iron ore price, which dropped 8% to below US$100 per ton for the first time this year. Copper prices also dropped again.

Rio Tinto update

ASX 200 mining share Rio Tinto today released an update for its 2022 second quarter, showing a rise in production of iron, copper and bauxite, but aluminium and titanium dioxide slag production fell.

It also told investors that higher rates of inflation had increased its closure liabilities, leading to an impact to underlying earnings.

The post These ASX 200 mining shares are getting buried. What’s happening? appeared first on The Motley Fool Australia.

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More reading

• ASX 200 midday update: Rio Tinto’s update, BHP and Fortescue sink, AVZ remains suspended
• Here’s why the BHP share price is stumbling on Friday
• Rio Tinto share price on watch after stronger than expected iron ore shipments
• 5 things to watch on the ASX 200 on Friday
• Why the yield you’re getting on ASX dividend shares may not be as advertised

Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group 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 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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At lunch on Friday, the S&P/ASX 200 Index (ASX: XJO) is on course to end the week with a sizeable decline. The benchmark index is currently down 1.3% to 6,566.3 points.

Here’s what is happening on the ASX 200 today:

Miners weigh on ASX 200

The resources sector is weighing heavily on the ASX 200 index on Friday. The likes of BHP Group Ltd (ASX: BHP) and Fortescue Metals Group Limited (ASX: FMG) are deep in the red and have led to the S&P/ASX 200 Resources index falling 3% today. This has been driven by a pullback in the iron ore prices amid concerns over the Chinese property market.

Rio Tinto’s quarterly update

The Rio Tinto Limited (ASX: RIO) share price has tumbled lower today after the iron ore price weakness offset the release of the company’s second quarter update. During the quarter, the mining giant achieved iron ore shipments of 79.9Mt. This was ahead of the market consensus estimate of 79.3Mt. Rio Tinto also reaffirmed its full year iron ore guidance for costs and shipments.

AVZ shares remain suspended

The AVZ Minerals Ltd (ASX: AVZ) share price was due to return to trade this morning. However, the embattled lithium developer has requested that its suspension continues for a further two weeks. This will bring the length of its suspension to just under three months. AVZ is battling legal action from a Chinese company that claims it owns a stake in the Manono Lithium project.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Friday has been the WiseTech Global Ltd (ASX: WTC) share price with a 4% gain. This morning the logistics solutions company upgraded its FY 2022 guidance. Going the other way, the Pendal Group Ltd (ASX: PDL) share price is the worst performer with a 9% decline. This follows another disappointing funds under management update.

The post ASX 200 midday update: Rio Tinto’s update, BHP and Fortescue sink, AVZ remains suspended appeared first on The Motley Fool Australia.

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More reading

• Setting the pace: Why ASX 200 bank shares are feeling the pinch on Friday
• Here’s why the BHP share price is stumbling on Friday
• WiseTech share price leaps 7% higher following upgraded guidance
• What’s going on with the AVZ share price?
• Rio Tinto share price on watch after stronger than expected iron ore shipments

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 WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) is having a rather dreadful end to the trading week so far this Friday.  At the time of writing, the ASX 200 has lost a painful 1.34% and is back to around 6,560 points. With a fall like that, it’s no real surprise to see most of the ASX 200 bank shares are also having a sad day on the markets.

Australia and New Zealand Banking Group Ltd (ASX: ANZ) seems to be copping the worst of it (as seems to be the case more often than not these days). ANZ shares are presently down a nasty 2.14% at $21.46.

Westpac Banking Corp (ASX: WBC) shares have lost 1.76% at $19.59 each., while the National Australia Bank Ltd (ASX: NAB) share price is down 1.63% at $27.84.

The ASX’s biggest bank share, Commonwealth Bank of Australia (ASX: CBA), has lost 1.48% at $91.85.

So what might be causing this late-week loss of confidence in the ASX banks today?

Why are ASX 200 bank shares getting smashed on Friday?

Well, it’s always possible that the bank shares are just getting caught up in the market’s pessimism today. It’s not like banks are the only losers this Friday. Other ASX 200 blue chips like BHP Group Ltd (ASX: BHP) and Telstra Corporation Ltd (ASX: TLS) are also down heavily.

But we do have some banking news that could be playing a role here.

As our Fool colleagues over in the United States covered, US earnings season has just kicked off. And, as it always does, it started with the US banking giant JPMorgan Chase & Co. As our colleagues reported, JPMorgan’s earnings were a disappointment. Here’s some of what was said:

…the bank reported earnings and revenue that missed analyst estimates and then suspended share repurchases for the time being…

JPMorgan reported softer investment banking results than the Street had been anticipating. Nobody expected a good quarter, given the lack of initial public offerings and other issuances, but revenue in investment banking fell short of expectations.

JPMorgan shares fell a nasty 3.49% in last night’s (our time) trading session. So these earnings from one of the world’s biggest banks may have dented confidence in our own big four this Friday. Either way, it is certainly not a good session for CBA, NAB and the other ASX 200 banks today.

The post Setting the pace: Why ASX 200 bank shares are feeling the pinch on Friday appeared first on The Motley Fool Australia.

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More reading

• Here’s what might happen to the NAB share price in FY2023
• Here’s what’s moving the CBA share price this week
• What’s the outlook for the ANZ share price in 2023?
• 5 things to watch on the ASX 200 on Friday
• Analysts name 2 ASX dividend shares to buy with 5%+ yields

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Sebastian Bowen has positions in JPMorgan Chase, National Australia Bank Limited, and 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 Australia has recommended Westpac Banking Corporation. 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 BHP Group Ltd (ASX: BHP) share price is on course to end the week with a disappointing decline.

In morning trade, the mining giant’s shares are down over 4% to $35.85.

This leaves the BHP share price trading within a whisker of its 52-week low of $35.56.

What’s going on with the BHP share price?

Investors have been selling down BHP’s shares on Friday amid weakness in the iron ore price overnight.

According to CommSec, the iron ore futures price dropped US$5.30 or 4.8% overnight to US$104.96 a tonne. The steel making ingredient came under pressure after Chinese authorities grappled with a wave of mortgage boycotts sweeping the country’s property sector.

This isn’t just impacting BHP. It has also led to fellow iron ore miners Fortescue Metals Group Limited (ASX: FMG), Mineral Resources Limited (ASX: MIN), and Rio Tinto Limited (ASX: RIO) falling heavily today.

Anything else?

Also potentially weighing on the BHP share price is the update out of rival Rio Tinto this morning.

While Rio Tinto has reaffirmed its iron ore guidance for both costs and shipments, it has warned about inflationary pressures impacting its earnings.

The mining giant commented:

Higher rates of inflation have increased our closure liabilities with an impact to underlying earnings. In the first half of 2022, this resulted in increased charges of approximately $400 million pre-tax within underlying earnings compared with the first half of 2021, including a $300 million increase in amortisation of discount, with the remainder impacting underlying EBITDA.

In addition, Rio Tinto advised that its Pilbara operations are being impacted by unplanned absences. These are of course being driven by a spike in COVID-19 cases in Western Australia.

BHP is due to update the market on its quarterly performance next week.

The post Here’s why the BHP share price is stumbling on Friday appeared first on The Motley Fool Australia.

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More reading

• Why the yield you’re getting on ASX dividend shares may not be as advertised
• These ASX 200 mining shares are bolstering the market today
• Why did the Rio Tinto and BHP share price struggle today?
• Analyst names 3 reasons to be bullish on the BHP share price
• $264 million! The 10 highest-paid CEOs on the ASX

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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Investors in National Australia Bank Ltd (ASX: NAB) over the past 12 months or so might be feeling lucky today as we put the 2022 financial year behind us.

FY2022 was not kind to ASX bank shares, or ASX shares in general for that matter. The financial year just gone saw the S&P/ASX 200 Index (ASX: XJO) lose 10.19% of its value. But several ASX bank shares did far worse.

Take Australia and New Zealand Banking Group Ltd (ASX: ANZ). Its shares went backwards by a painful 21.74% over FY2022. Commonwealth Bank of Australia (ASX: CBA) shares fared slightly better than the index, losing 9.5%.

But the NAB share price was a standout performer, gaining 4.46% for the financial year just gone. That makes it the best performing big four bank of FY2022.

But now that FY2022 is in the rearview mirror and FY2023 has begun, what are the experts saying about the NAB share price today?

Is the NAB share price a buy for FY2023?

Well, in some further good news for NAB investors, opinion seems consistently positive on the bank.

As discussed last weekend, one broker who is bullish on NAB shares right now is Goldman Sachs.

Goldman has recently reaffirmed a conviction buy rating for NAB shares with a 12-month share price target of $34.26. That’s a good 22% or so from where the bank sits today.

Goldman likes the look of NAB’s balance sheet and is also pencilling in a healthy dividend hike for FY2023 to $1.68 in dividends per share.

But Goldman Sachs is not the only ASX broker who likes the look of NAB shares for FY2023. As my Fool colleague Tristan covered just this week, brokers at Macquarie are also eyeing off the NAB share price.

Macquarie currently has NAB as its preferred ASX bank share. It has given NAB an outperform rating as well as a $29.50 share price target.

The broker is neutral on ANZ shares as well as Westpac Banking Corp (ASX: WBC) shares. Its least preferred bank is CBA, with an underperform rating.

So it looks as though broker opinion is rather bullish on NAB shares. No doubt that will be the cherry on top for investors, who have already been gifted with a marked year of outperformance by NAB.

At the current NAB share price, this ASX 200 bank share has a market capitalisation of $89.49 billion with a dividend yield of 4.99%.

The post Here’s what might happen to the NAB share price in FY2023 appeared first on The Motley Fool Australia.

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More reading

• Why the yield you’re getting on ASX dividend shares may not be as advertised
• Surprise US inflation pumps the brakes on ASX 200 bank shares
• What’s the outlook in FY23 for ASX 200 bank shares?
• Are falling BNPL shares pushing the ASX banks higher today?
• Here are the 5 best ASX 200 bank shares of FY22

Motley Fool contributor Sebastian Bowen has positions in National Australia Bank Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs. The Motley Fool Australia has recommended Macquarie Group 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 CSL Limited (ASX: CSL) share price could a strong performer in financial year 2023 (FY23). Indeed, the S&P/ASX 200 Index (ASX: XJO) healthcare giant appears to be a FY23 broker favourite.

The CSL share price outperformed the ASX 200 last financial year, slipping around 5% compared to the index’s 10% tumble.

Could the ASX 200 staple end FY23 in the green? Keep reading to find out what experts are predicting.

Brokers tip growth for CSL share price

The CSL share price could be a FY23 winner, according to brokers and industry experts.

The company operates in two major spaces: Blood plasma and influenza vaccines.

In addition to those businesses, it announced its plan to acquire Swiss biotechnology giant Vifor Pharma in December. The approximately $17 billion acquisition is expected to be completed in coming months.

That means FY23 will likely see the ASX 200 company posting earnings from Vifor Pharma for the first time.

Additionally, rebounding blood plasma collections seemingly bode well for the stock.

One top broker expecting big things from CSL is Citi.

The broker has tipped the stock to lift to $330, slapping it with a ‘buy’ rating, my Fool colleague James reports. Citi believes tough times for plasma have passed, saying:

With plasma collections now back to pre-pandemic levels, we expect the market to shift its focus to the strong underlying plasma product demand. This should lead to strength in the CSL share price.

There’s similar sentiment coming from Morgan Stanley’s camp, where analysts have put an ‘overweight’ rating and a $312 price target on CSL’s stock.

Meanwhile, the team at Macquarie Group Ltd (ASX: MQG) are also expecting the stock to lift to $312.

And the stock has gotten off to a strong start already this financial year. The CSL share price has lifted 10% since the end of June.

The above-mentioned brokers’ expectations represent a further upside of between 5%. and 11%.

The post Could FY23 be a good year for the CSL share price? appeared first on The Motley Fool Australia.

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More reading

• 3 ASX shares to buy in a sector suddenly soaring this month: expert
• Why is the CSL share price up 11% in a month?
• Top brokers name 3 ASX shares to buy today
• $264 million! The 10 highest-paid CEOs on the ASX
• What are brokers saying about the CSL share price?

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. The Motley Fool Australia has recommended Macquarie Group 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 Commonwealth Bank of Australia (ASX: CBA) share price is down 1.4% in morning trade, in line with the S&P/ASX 200 Index (ASX: XJO) losses.

CBA shares closed yesterday at $93.22 and are currently trading for $91.93.

It was shaping up to be a pretty good week for the big bank until Thursday rolled in.

Central banks could upset the apple cart

The CBA share price closed flat on Monday before gaining 1.2% on Tuesday and another 1.1% on Wednesday.

Then, on Thursday, investors were greeted with the latest round of inflation figures out of the United States. With a 1.3% increase in June, the world’s biggest economy reported a searing 9.1% annual inflation figures. That sees US inflation running at 40-year highs, and significantly higher than market expectations.

This almost guarantees continuing aggressive tightening from the US Federal Reserve, perhaps even a full 1% rate increase, with central banks the world over following suit.

Here in Australia, Thursday also saw the Australian Bureau of Statistics release the latest labour figures. Those pointed to record levels of employment even as the labour participation rate increased, with the unemployment rate falling 0.4% to a new low of 3.5%.

While it’s great to have most Aussies employed, this will put further upward pressure on wages, adding fuel to the inflation fire. And it also almost locks in another rate rise from the Reserve Bank of Australia in August, with analysts forecasting a rise of 0.50% to 0.75%.

The combination of these factors saw the CBA share price close down 1.5% yesterday even as the ASX 200 managed to gain 0.4%.

Why fast rising rates could stymie the CBA share price

Gradual rate rises can be good news for banks, as higher rates enable the banks to increase their lending margins.

But fast rising rates can pose some significant headwinds, and it’s these fears that look to have taken a bite out of the CBA share price yesterday.

If the RBA takes the cash rate too high too fast, it will put tremendous pressure on highly indebted homeowners and could see a surge in defaults. Fast rising rates will also decrease the appetite for new home loans from both investors and owner occupiers.

All this, while inflation erodes the overall spending power of the Aussie dollar.

The post Here’s what’s moving the CBA share price this week appeared first on The Motley Fool Australia.

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More reading

• Surprise US inflation pumps the brakes on ASX 200 bank shares
• What’s the outlook in FY23 for ASX 200 bank shares?
• Investors were seeking out ASX shares in June. Here’s why
• Are falling BNPL shares pushing the ASX banks higher today?
• Down 9%, can CBA shares bounce back in FY23?

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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