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The Goodman Group (ASX: GMG) share price suffered a sizeable drop last month. Goodman shares fell by around 13% in June 2022.

Plenty of S&P/ASX 200 Index (ASX: XJO) shares went down last month as well. That’s why the ASX 200 fell by around 9% last month. So, there has been some underperformance in the short term.

Goodman is one of the largest property businesses on the ASX. It owns and develops industrial properties in various markets around the world.

Interest rates

A change in the interest rate can significantly impact an asset’s value. Why? Legendary investor Warren Buffett once described why interest rates are so important:

The value of every business, the value of a farm, the value of an apartment house, the value of any economic asset, is 100% sensitive to interest rates because all you are doing in investing is transferring some money to somebody now in exchange for what you expect the stream of money to be, to come in over a period of time, and the higher interest rates are the less that present value is going to be. So every business by its nature… its intrinsic valuation is 100% sensitive to interest rates.

Central banks have been increasing interest rates to try and control elevated levels of inflation.

Last month, the Reserve Bank of Australia (RBA) decided to increase the interest rate by 50 basis points, or 0.5%. The United States Federal Reserve interest rate went up by 75 basis points, or 0.75%.

Both central banks are expected to increase the interest rate in July and in the coming months.

Broker thoughts on Goodman share price

The broker Morgan Stanley recently called Goodman Group a buy, with a price target of $23.70. That implies a possible rise of around 30%. It suggests that higher interest rates are a negative for property businesses like Goodman.

However, the broker UBS is less optimistic. It has a ‘neutral’ rating on the business, with a price target of $18.57. That’s almost exactly where the business is trading at today. However, it was noted that Goodman is looking cheaper on a price/earnings (p/e) ratio basis.

Latest business update

In May 2022, Goodman said that it’s expecting the FY22 operating earnings per security (EPS) to grow by 23%.

Goodman noted that total assets under management increased to $68.7 million at 31 March 2022. This is expected to be more than $70 billion by June 2022.

The property ASX share outlined why it’s seeing growth in demand, rental income and valuation for its real estate:

Consumers continue to seek faster and more flexible delivery. This requires intensification of warehousing in urban locations, and an increase in automation and technology to optimise delivery and improve efficiency. Our global business is concentrated in key urban locations and focused on delivering opportunities through planning, change of use, sustainability features and higher intensity use. This allows our customers to achieve greater value and enhanced productivity from the space, mitigating the higher cost.

Goodman share price snapshot

Since the beginning of 2022, the Goodman share price has fallen by around 32%.

The post Why did the Goodman share price suffer a sell-off in June? appeared first on The Motley Fool Australia.

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More reading

• Here’s why the Goodman Group share price is sinking today
• Are these blue chip ASX 200 shares in the buy zone?
• Time is running out to secure the Goodman Group dividend. Here’s what you need to do
• Here’s 3 popular ASX shares that are trading ex-dividend next week
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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 dividends shares to buy to boost your income portfolio? If you are, you may want to check out the two listed below.

Here’s what you need to know about these ASX dividend shares:

Centuria Industrial REIT (ASX: CIP)

The first ASX dividend share to look at is Centuria Industrial.

It is the owner of a portfolio of high-quality and in-demand industrial assets found across key metropolitan locations throughout Australia.

Centuria Industrial has been on form again so far in FY 2022, delivering 10% rental growth and an occupancy rate just a touch short of 100%. And with demand for industrial properties remaining very strong, the team at Macquarie expect the company to be in a position to pay some very attractive dividends in the near term.

Furthermore, due to recent share price weakness, the broker sees plenty of value in the Centuria Industrial share price at the current level, which it notes is trading at a large discount to net tangible assets. As a result, Macquarie has put an outperform rating and $3.94 price target on its shares.

As for dividends, the broker is forecasting a 17.3 cents per share distribution in FY 2022 and a 16.8 cents per share distribution in FY 2023. Based on the current Centuria Industrial share price of $2.87, this will mean yields of 6% and 5.8%, respectively

HomeCo Daily Needs REIT (ASX: HDN)

Another ASX dividend share that has been rated as a buy is HomeCo Daily Needs REIT. It is a property company with a focus on neighbourhood retail, health and services, and large format retail.

Goldman Sachs is a big fan of HomeCo Daily Needs and has a buy rating and $1.70 price target on its shares.

Its analysts believe the company is well positioned to benefit from the shift to omni channel retailing. The broker also points out that the company has additional opportunities to drive earnings growth over the medium-term from development and asset optimisation.

As for dividends, Goldman is forecasting dividends per share of 8 cents in FY 2022 and 9 cents in FY 2023. Based on the current HomeCo Daily Needs share price of $1.30, this will mean dividend yields of 6.1% and 6.9%, respectively.

The post Analysts name 2 top ASX dividend shares with big yields to buy appeared first on The Motley Fool Australia.

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More reading

• This is the latest ASX 200 sector to be hit by downgrades
• Experts name 2 ASX dividend shares with big yields to buy
• Building up income: 2 ASX dividend shares I believe are buys
• Why ASX-listed property shares could be on the chopping block
• Analysts name 2 top ASX 200 dividend shares to buy now

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 Commonwealth Bank of Australia (ASX: CBA) share price has been through a rough time since 6 June 2022, falling by more than 13%. That could be pretty unlucky for shareholders who bought just before the drop.

CBA and the other big four ASX bank shares – Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group Ltd (ASX: ANZ) – have all fallen amid the Reserve Bank of Australia (RBA) response to the elevated rate of inflation.

Last month, Australia’s central bank increased the interest rate by 50 basis points, or 0.5%.

What does that mean for banks? Well, the market sent the CBA share lower.

Why? It’s a good question because the logic before was that higher interest rates would be good for bank profitability, helping banks’ net interest margin (NIM).

However, investors may not have factored in that the RBA would increase interest rates as much as is happening now. What’s more, the interest rate is expected to go quite high (compared to the 0.1% it was sitting at before).

High interest rate to cause more loan losses?

Experts accept that a higher interest rate will help the banks’ NIM. However, the difficulty could be how much this hurts loan growth. The risk is it could lead to a greater number of loan losses and arrears.

Brokers Morgan Stanley and Morgans, as two examples, have both warned that the big four ASX banks and the CBA share price could hurt from elevated losses on loans.

Households have been saving during the COVID-19 period. Indeed, the RBA governor said that household balance sheets are “generally in good shape” and that “the household saving rate also remains higher than before the pandemic and many households have built up large financial buffers.”

How high could interest rates go?

The RBA will soon announce whether interest rates are increasing a further 25 basis points or 50 basis points in July. Last month, Lowe said:

The Board expects to take further steps in the process of normalising monetary conditions in Australia over the months ahead. The size and timing of future interest rate increases will be guided by the incoming data and the Board’s assessment of the outlook for inflation and the labour market. The Board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time.

The RBA thinks that inflation could reach 7% by the end of the year. Investors’ expectations imply that the RBA interest rate could reach 3% by the end of 2022.

Is the CBA share price going to go higher?

No one has a crystal ball to know what happens next. But there are plenty of brokers that are negative on CBA right now.

Morgan Stanley is ‘underweight’ on the business. Macquarie rates CBA as ‘underperform’. Meanwhile, Citi has a ‘sell’ rating on CBA.

Citi suggests that the CBA valuation premium could reduce to the other big banks during this period. However, the price target is $90.75, which is where it’s currently trading.

The Morgan Stanley price target is $79, implying a drop of more than 10%. The broker thinks CBA might not just see higher loan losses, but its NIM could be impacted by higher funding costs, including paying savers more. In other words, higher interest rates won’t flow straight onto the bottom line.

The broker Macquarie has a price target of $78 on the business, implying a decline of 14%. Macquarie said that while the NIM could rise in the short term, there may be impacts from slower loan book growth and higher losses.

The post Could the CBA share price turn over a new leaf in July? appeared first on The Motley Fool Australia.

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More reading

• Why did the CBA share price crash 13% in June?
• Why this fundie favours NAB and Westpac shares out of the big four
• Why the CBA share price is slipping lower today
• Volt gets packing as ASX 200 bank shares prove to be a formidable force
• Own CBA shares? Here’s how the major bank’s bet on Klarna is holding up

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited and 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 Xero Limited (ASX: XRO) share price suffered again in June, falling by 14%.

Xero shares have been dumped, like plenty of other ASX growth shares. In 2022, the Xero share price has dropped by 47% amid inflation and interest rate rises.

However, some experts believe this could be opening up an opportunity to buy shares of the cloud accounting business at a much cheaper price.

Let’s look at where some brokers feel the Xero share price could go in the shorter term.

Broker ratings on the Xero share price

A price target on the ASX tech share is where the broker thinks the Xero share price will be in 12 months’ time.

Morgans recently slapped an ‘add’ rating on the business with a price target of $90.25. That would imply a possible rise of around 17% over the next year from the current level. It thinks the ongoing growth of subscriber numbers and a rise in the average revenue per user (ARPU) could help the business. The broker thinks that Xero still has plenty of growth to come.

Ord Minnett also thinks it’s a buy, with a price target of $97. That’s a potential rise of around 26%. The broker thinks that recently-announced subscription price increases will help raise ARPU.

Ongoing growth

Despite all of the volatility happening on asset markets, Xero continues to grow and is investing for even more growth.

In the FY22 half-year result, Xero reported that its operating revenue increased by 29% to NZ$1.1 billion and total subscribers went up by 19% to 3.3 million. It also said that the average revenue per user (ARPU) went up 7% to NZ$31.36. Growth here could help the Xero share price.

Other financial statistics have also been showing growth. The Xero annualised monthly recurring revenue (AMRR) went up by 28% to NZ$1.23 billion and the gross profit margin improved by 1.3 percentage points to 87.3%.

Xero CEO Steve Vamos said:

The value Xero brings to our small business customers and the trust they place in us illustrated by this result. Our strong revenue and subscriber growth gives us confidence to continue to invest for growth consistent with our long-term strategy.

We are committed to delivering the world’s most insightful and trusted small business platform by focusing on driving cloud accounting adoption, growing the small business platform and building for global scale and innovation. We continue to prioritise investment in building products and growing partnerships by investing cash generated to help deliver our strategy, drive long-term growth and meet customer needs.

Xero share price snapshot

While the Xero share price is down 44% over the past year, it is up by 216% over the last five years, showing the company’s progress.

The post Should investors zero in on the Xero share price in July? appeared first on The Motley Fool Australia.

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More reading

• The Xero share price lost 14% last month. Here’s the tea
• What on earth happened to ASX 200 tech shares in June?
• Brokers name 3 ASX shares to buy today
• Why this top broker just slapped a buy rating on Xero shares
• Here’s why ASX 200 tech shares are taking a beating on Wednesday

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. 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 Xero. The Motley Fool Australia has positions in and has recommended Xero. 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 with a decline. The benchmark index fell 0.4% to 6,539.9 points.

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

ASX 200 expected to jump

The Australian share market looks set to start the week on a very positive note after a strong finish to the week on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 96 points or 1.5% higher this morning. On Wall Street, the Dow Jones was up 1.05%, the S&P 500 rose 1.05%, and the Nasdaq climbed 0.9%.

Oil prices rise

Energy producers Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) could have a good start to the week after oil prices rose strongly on Friday. According to Bloomberg, the WTI crude oil price climbed 2.5% to US$108.43 a barrel and the Brent crude oil price climbed 2.4% to US$111.83 a barrel. Supply outages in Libya and expected shutdowns in Norway boosted prices.

Good day expected for tech sector

It could be a good day of trade for the Block Inc (ASX: SQ2) share price and other tech shares on Monday. This follows a positive night of trade for the tech-focused Nasdaq index on Friday. Over on the NYSE, the Block share price rebounded from recent selling and rose a sizeable 4%.

Iron ore price falls

BHP Group Ltd (ASX: BHP) and Fortescue Metals Group Limited (ASX: FMG) shares will be in focus today after a pullback in the iron ore price. According to Metal Bulletin, the benchmark iron ore price dropped 4.3% to US$113.90 a tonne. This led to the NYSE listed BHP share price falling almost 4% on Friday night.

Gold price edges lower

Gold miners 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 night. According to CNBC, the spot gold price was down 0.3% to US$1,801.5 an ounce. This led to gold recording another small weekly decline.

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

• The Xero share price lost 14% last month. Here’s the tea
• Should investors dig the Fortescue share price in July?
• Why did the Santos share price plunge 10% in June?
• What on earth happened to ASX 200 tech shares in June?
• Here are the top 10 ASX shares today

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

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If you have room for some new portfolio additions in July, then it could be worth considering the three ASX growth shares listed below.

Here’s what you need to know about these buy-rated shares:

Lovisa Holdings Limited (ASX: LOV)

The first ASX growth share to look at is fast-fashion jewellery retailer Lovisa. It could be a top long term option due to its bold global expansion plans, which will be overseen by its relatively new CEO, Victor Herrero. He previously led Inditex (Zara, Pull & Bear and Massimo Dutti) in China, which could be a key market for the company in the future.

Morgans is very bullish on the company due to its massive store expansion potential. It highlights that “Lovisa now has 81 stores [in the US], representing 0.25 stores for every million people), compared to Australia with 158 stores, 6.15 stores for every million people.” In light of this, the broker feels “we could be at the start of a period of remarkable expansion.” Morgans has an add rating and $24.00 price target on its shares.

Megaport Ltd (ASX: MP1)

Another growth share to look at is this global leading provider of elastic interconnection services. Using software defined networking, Megaport’s global platform allows users to rapidly connect their network to other services across the Megaport Network. After which, services can then be directly controlled by customers via mobile devices, their computer, or its open API.

Goldman Sachs is bullish on Megaport. It notes that the company has an “immense” $129 billion market opportunity and is forecasting very strong growth in the coming years. As a result, it has put a buy rating and $13.10 price target on its shares.

Readytech Holdings Ltd (ASX: RDY)

Another ASX growth share to look at is Readytech. It owns a portfolio of enterprise software businesses across several market verticals such as higher education and local government. These businesses operate in market niches that are under-served by both large and small enterprise software competitors. A testament to its quality is its high (and growing) levels of recurring revenue and ultra low churn levels.

Goldman Sachs is also bullish on Readytech. It expects the company to “continue to grow mid-teens organically while making accretive acquisitions.” In light of this, the broker recently resumed coverage on its shares with a buy rating and $4.60 price target.

The post Analysts name 3 buy-rated ASX growth shares for July appeared first on The Motley Fool Australia.

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More reading

• Here’s why I think Lovisa could be a top ASX dividend share
• Megaport share price slumps 5% despite takeover speculation
• 5 things to watch on the ASX 200 on Wednesday
• Here are 2 fantastic ASX tech shares that analysts rate as buys
• Analysts say these ASX growth shares have huge upside potential

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 MEGAPORT FPO and Readytech Holdings Ltd. The Motley Fool Australia has recommended Lovisa Holdings Ltd, MEGAPORT FPO, and Readytech Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The BrainChip Holdings Ltd (ASX: BRN) share price had a disappointing month in June.

The semiconductor company’s shares ended the month 30% lower than where they started it.

This was despite BrainChip’s shares being added to the illustrious ASX 200 index during the month.

What happened to the BrainChip share price?

Investors were selling down the BrainChip share price in June amid broad market weakness. With interest rates increasing to combat rising inflation, this put pressure on equities.

This was particularly the case at the higher risk side of the market, where BrainChip certainly sits.

For example, even after June’s decline, the company has a market capitalisation of over $1.4 billion despite its revenue year to date being just $205,000.

When annualised to $820,000, this means its shares are changing hands for a ridiculous 1700 times revenue. And this is before the company has even proven that it has a market for its Akida neuromorphic processor.

In light of this, it is no surprise that when the market wobbles, the BrainChip share price tumbles.

What’s next?

The next 12 months will be very interesting for the BrainChip share price. With the company now commercialising its technology, it will have to let its sales do the talking rather than its press releases or podcasts.

Which may not be as easy as many first thought. Especially given that some of the hyped-up partnerships from the last 2-3 years appear to have amounted to nothing.

For example, its partnership with NASA was big news back in 2020 and is still talked about today as a reason to invest in BrainChip. But this seems to have ended after just three weeks on 18 January 2021 based on NASA data. It’s also worth noting that there was no mention of NASA in its most recent annual report.

So, should sales fail to materialise in a market dominated by some huge tech behemoths such as AMD, Intel, and Nvidia, then there’s a distinct danger that its days as a billion dollar plus company could be numbered.

The post Why did the BrainChip share price crash 30% in June? appeared first on The Motley Fool Australia.

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More reading

• Why is the BrainChip share price sliding 4% today?
• Why is the BrainChip share price gaining 5% on Friday?
• How has the BrainChip share price performed since joining the ASX 200?
• Why did the BrainChip share price spike 7% this morning?
• 5 things to watch on the ASX 200 on Monday

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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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:

Collins Foods Ltd (ASX: CKF)

According to a note out of Morgans, its analysts upgraded this KFC restaurant operator’s shares to an add rating with a trimmed price target of $11.50. Morgans was impressed with Collins Foods’ full year result. And while its analysts expect inflationary pressures to weigh on its margins in FY 2023, it has still lifted its earnings estimates for the next two financial years to reflect stronger than expected sales growth. This is expected to be supported by resilient consumer demand and strong pricing power. The Collins Foods share price ended the week at $10.02.

IGO Ltd (ASX: IGO)

A note out of Macquarie reveals that its analysts have retained their outperform rating and $17.00 price target on this battery metals miner’s shares. Macquarie is bullish on IGO due to its world class lithium business, which it expects to underpin material earnings growth in the near term. Furthermore, the broker highlights that the company’s shares trade at a discount to lithium peers. The IGO share price was fetching $9.83 at Friday’s close.

Qantas Airways Limited (ASX: QAN)

Analysts at Morgan Stanley have retained their overweight rating but trimmed their price target on this airline operator’s shares to $6.60. This followed the release of a business update which revealed a much stronger balance sheet that Morgan Stanley was expecting. And while the broker has reduced its earnings estimates to reflect higher fuel costs, it expects higher airfares and reduced capacity to provide some relief. The Qantas share price ended the week at $4.45.

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

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More reading

• Brokers name 3 ASX shares to buy today
• These 2 ASX 200 shares are going ex-dividend next week
• Why did the Qantas share price plunge 19% in June?
• These were the best performing ASX 200 shares in June
• Top brokers name 3 ASX shares to buy today

Motley Fool contributor James Mickleboro has positions in Collins Foods Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Collins Foods Limited. The Motley Fool Australia has recommended Collins Foods 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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With oil prices still trading at elevated levels, some investors may be interested in gaining exposure to the energy sector.

For those that are, the two ASX shares listed below could be worth considering. They have been named by Bell Potter as two of its top picks in the energy sector for FY 2023.

Here’s what you need to know:

Beach Energy Ltd (ASX: BPT)

The first energy share that Bell Potter is bullish on is Beach Energy. It believes the company is well-placed to benefit from high oil prices in the short term and its growth plans over the medium term.

The broker explained:

BPT should continue to benefit from elevated crude prices in the shortterm, though operating leverage from its Western Flank asset will shrink as gas and LNG production from its growth projects ramp up over the next two years.

The company’s growth ambitions are fully funded; new development wells in the Victorian Otways should be commissioned by the end of FY23, lifting production capacity to plant limits (205TJ/day, gross) while improving marketing of gas volumes on a spot basis. The company’s timely entry into global LNG markets (expected from 1H CY2023), through its Waitsia Stage 2 development, coincides with a robust outlook for LNG prices.

Bell Potter has a buy rating and $2.00 price target on Beach’s shares.

Strike Energy Ltd (ASX: STX)

Another ASX energy share that Bell Potter rates highly is Strike Energy. It believes the company is well-positioned to benefit from the tightening domestic gas market in Western Australia. It also sees a lot of potential in management’s fertiliser plans.

It commented:

STX will benefit from Western Australia’s tightening domestic gas market while pursuing downstream value adding manufacturing. There are multiple upcoming catalysts as its upstream projects progress to production in 2023-24, and as its flagship Project Haber urea fertiliser project is de-risked through FEED and financing.

STX has a strong eye to ESG commitments, with a net zero Scope 1 and 2 target by 2030 and an aspiration to also offset Scope 3; Project Haber and the company’s geothermal project are key carbon offsets.

Bell Potter has a speculative buy rating and 39 cents price target on Strike Energy’s shares.

The post Broker names 2 of the best ASX energy share to buy in FY23 appeared first on The Motley Fool Australia.

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• Why are ASX 200 energy shares dragging on the market today?
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• Can the Beach Energy share price hit $1.95?

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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After a comparatively decent showing in May, the Commonwealth Bank of Australia (ASX: CBA) share price gave back its gains and more in June.

During the month, Australia’s oldest bank saw its shares lose 13.4% of their value.

This compares unfavourably to the ASX 200 index and its 8.9% decline in June.

Why did the CBA share price drop in June?

The CBA share price was sold off early on in the month after the Reserve Bank of Australia shocked the market with a far more aggressive rate hike than the market was expecting.

This sparked fears that the central bank’s attempts to tame inflation could bring about a recession and lead to a rise in bad debts.

It wasn’t just the CBA share price that tumbled on the news. All the big four banks dropped and ultimately posted sizeable monthly declines.

What else?

Also putting pressure on the CBA share price was a broker note out of Morgan Stanley last month.

Due to concerns over a weaker housing and mortgage market, its analysts retained their underweight rating and slashed their price target on the bank’s shares from $91.00 down to $79.00.

Morgan Stanley points out that Australian mortgage growth has slowed meaningfully during previous quick and aggressive RBA rate hikes. Unfortunately, this time around the broker suspects that things could be even worse.

“In this cycle, we believe the slowdown will be greater given household leverage is higher than in prior cycles, mortgage rates are starting from a lower base, and cash rate hikes are likely to be larger,” the broker said.

Elsewhere, the team at Citi retained its sell rating and $90.75 price target. Citi warned that the valuation gap between CBA and the rest of the big four could narrow.

The post Why did the CBA share price crash 13% in June? appeared first on The Motley Fool Australia.

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More reading

• Why this fundie favours NAB and Westpac shares out of the big four
• Why the CBA share price is slipping lower today
• Volt gets packing as ASX 200 bank shares prove to be a formidable force
• Own CBA shares? Here’s how the major bank’s bet on Klarna is holding up
• CBA share price leads the big four as banks outperform ASX 200 on Monday

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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