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Many of Australia’s top brokers have been busy adjusting their financial models again, leading to the release of a large number of broker notes this week.

Three ASX shares brokers have named as buys this week are listed below. Here’s why they are bullish on them:

Allkem Ltd (ASX: AKE)

According to a note out of Morgans, its analysts have retained their add rating but trimmed their price target on this lithium miner’s shares to $16.38. This follows the release of an update out of Allkem which revealed stronger pricing for its lithium carbonate but softer production for its spodumene operations. Overall, while this was a mixed update, the broker remains positive on Allkem, particularly given management’s production growth plans. The Allkem share price is trading at $11.63 today.

CSL Limited (ASX: CSL)

A note out of Morgan Stanley reveals that its analysts have retained their overweight rating and $310.00 price target on this biotherapeutics company’s shares. Morgan Stanley notes that updates from some of CSL’s peers have painted a favourable picture for industry trading conditions. In addition, the broker is pleased with the progress the company is making with its collection centre rollout. The CSL share price is fetching $270.90 on Wednesday.

Playside Studios Ltd (ASX: PLY)

Analysts at Ord Minnett have retained their speculative buy rating and 95 cents price target on this games developer’s shares. This follows news that the company has signed a new work for hire deal with tech giant Meta Platforms (Facebook) with a focus on virtual reality and the metaverse. The broker feels this further demonstrates the quality of the company’s studio. The Playside share price is trading at 70 cents on Wednesday.

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

More reading

• Why Macquarie still sees ‘material upside’ for ASX lithium shares
• Analysts have just named these 2 ASX lithium stocks as buys
• 2 ‘quality defensive’ ASX shares to see out rising interest rates: Wilsons
• ASX 200 midday update: Magellan smashed, Liontown signs Tesla deal
• PlaySide share price jumps 11% after scoring Meta extension

Motley Fool contributor James Mickleboro has positions in Allkem Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. 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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In perhaps a sign of the times, an ASX shares trading platform and a cryptocurrency exchange are merging to form a mega one-stop-shop.

Superhero, the online stockbroking platform that made headlines for charging just $5 brokerage, has revealed it would merge with crypto exchange Swyftx.

The deal, called “historic” by both Australian companies, will result in a new $1.5 billion fintech monster.

Swyftx co-founder Alex Harper said the merger was “a significant step” for both parties as they evolved from disrupters into a “major financial institution”.

“There is a deep level of mutual respect and alignment between our teams and the experience that the Superhero team has in the regulated business will be enormously important in shaping the future of the combined entity, especially with digital currency going through its own journey towards regulation.”

Explosive growth during the pandemic

Both companies enjoyed explosive growth in recent times as Australians flocked to shares and crypto during the long COVID-19 lockdowns.

Swyftx saw its user base grow an incredible 1,200% last year. The platform now has more than 600,000 retail and institutional investors on its books.

Superhero launched in late 2020, with some parts of the industry labelling it Australia’s answer to the popular US stock platform Robinhood Markets Inc (NASDAQ: HOOD).

It also saw its user population expand exponentially, growing 600% over the last 12 months to now boast 200,000 clients.

The company now also offers a superannuation product, which, judging by its name, was its original founding mission.

‘Exciting day’ for both platforms

Both platforms will continue to run as standalone sites as plans are made to offer all of the new group’s services on both.

Harper and current Swyftx chief Ryan Parsons will become co-executive officers of the merged entity. Superhero co-founder John Winters will sit on the board.

The transaction is due to complete early in the new financial year. 

Winters said it was “an incredibly exciting day”.

“We are thrilled to announce this merger and offer our customers the opportunity to invest in traditional and digital assets across a single platform. 

“The Swyftx team has achieved amazing things since launching in 2018 and we can’t wait to join together to offer investors an even better investing experience.”

The post Popular ASX shares and crypto platforms merge in $1.5bn deal appeared first on The Motley Fool Australia.

More reading

• Why is the Woodside share price flying higher today?
• Why has the CBA share price cratered 4% today?
• Why BrainChip, Firefinch, Magellan, and Westpac shares are dropping
• Bendigo Bank share price slides 7% as ASX banking basket unwinds on Wednesday
• Belt tightening? 5 ASX 200 consumer shares slipping to new 52-week lows today

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

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The Woodside Energy Group Ltd (ASX: WDS) share price is leaping ahead on the ASX today.

The energy giant’s shares are currently swapping hands at $34.28, a 4% gain. For perspective, the S&P/ASX 200 Index (ASX: XJO) is rising 0.31% today.

So what is impacting the Woodside Energy share price today?

Oil and gas prices rise

Investors appear to be reacting to higher oil and natural gas prices. Woodside is a producer of both oil and gas.

US natural gas prices jumped 0.82% to US$9.3570 MMBTU, trading economics data shows. Natural gas prices have surged 33.18% in a month. Gas futures are currently at a 13 year high, at the highest level since August 2008. Greater demand and declining production are driving up prices.

Oil prices are also climbing today. Benchmark Brent crude oil is up 0.37% to US$121.02 a barrel at the time of writing, while WTI Crude Oil is leaping 0.47% to US$119.97 a barrel, Bloomberg figures show.

This rises comes amid Goldman Sachs predicting Brent crude oil prices could average US$140 a barrel in the months of July through to September, CNN reported. This would be a 15.7% upside on the current brent crude oil price.

Oil and gas producers Santos Ltd (ASX: STO) and Beach Energy Ltd (ASX: BPT) are also rising by 3% and 1.36% respectively today.

Broker Morgan Stanley has recently tipped Woodside to deliver US$20 billion in dividends in the next decade. Analysts reportedly said:

We forecast Woodside will distribute US$20 billion in dividends over the coming decade, providing it with another US$20 billion to re-invest in growth, diversify, and pursue further capital management.

Woodside started trading on the ASX under a new name and ASX ticker on 25 May. This followed shareholder approval for the merger with BHP Group Ltd (ASX: BHP)’s petroleum business on 19 May. Earlier this week, Woodside started trading on the London Stock Exchange (LSE), while it commenced trading on the New York Stock Exchange (NYSE) on 2 June.

Woodside share price snapshot

The Woodside share price has risen 43% in the past year, while it’s up a whopping 56% year to date.

For perspective, the S&P/ASX 200 Energy Index (ASX: XEJ) has returned about 30% in the past year.

Woodside has a market capitalisation of about $65 billion based on the current share price.

The post Why is the Woodside share price flying higher today? appeared first on The Motley Fool Australia.

More reading

• Why are ASX 200 energy shares jumping today?
• Why is the BHP share price having such a stellar day?
• What’s coming up for the Woodside share price in June?
• ‘Woodside will distribute US$20bn in dividends over the coming decade’: Morgan Stanley
• Why GrainCorp, New Hope, Tabcorp, and Woodside shares are pushing higher

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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Overall, it’s been a rather pleasing day for the S&P/ASX 200 Index (ASX: XJO) and ASX shares. At the time of writing, the ASX 200 has gained 0.4% to back over 7,100 points. But the same certainly can’t be said of the Commonwealth Bank of Australia (ASX: CBA) share price.

CBA shares are currently in the red. And decisively so. The ASX 200’s largest bank share is currently down by a painful 4.36% at $97.52 a share.

So what’s behind this unusually large drop for CBA, especially on a day that has the market up?

Why has the CBA share price crated on Wednesday?

Well, it’s got nothing to do with anything out of the bank itself, seeing as CBA has made no new ASX announcements for days now. But we did have some big news yesterday that looks to be impacting most ASX bank shares today.

As you may have heard, yesterday saw the Reserve Bank of Australia (RBA) raise interest rates by a surprising 50 basis points, taking the cash rate from 0.35% to 0.85%. Most commentators weren’t expecting such a large rise, which is the first time the RBA has hiked rates by 50 points in decades.

CBA isn’t the only bank feeling the pain. All ASX 200 banks are down today, including all four of the majors. It could have been worse for CBA too. Westpac Banking Corp (ASX: WBC) shares are down close to 6%. Bendigo and Adelaide Bank Ltd (ASX: BEN) has lost close to 7%.

As my Fool colleague Bernd covered earlier, rising rates do have the potential to lift banks’ margins. However, higher rates also increase funding costs for banks, and put pressure on house prices. The latter isn’t good news for banks, especially ones with large mortgage exposure like CBA.

So this is the probable reason why Commonwealth Bank shares are suffering today.

At the new CBA share price, Commonwealth Bank shares have a market capitalisation of $166.94 billion, with a dividend yield of 3.83%.

The post Why has the CBA share price cratered 4% today? appeared first on The Motley Fool Australia.

More reading

• Why are ASX 200 bank shares plunging on Wednesday?
• The CBA share price is now trading on a 3.5% fully-franked dividend yield
• What’s dragging on ASX 200 bank shares like NAB on Thursday?
• What’s the outlook for the CBA share price in June?
• Iron ore price to fall 27% by end of 2022: CBA

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Bendigo and Adelaide Bank 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 S&P/ASX 200 Index (ASX: XJO) is on course to record a decent gain. In afternoon trade, the benchmark index is up 0.8% to 7,152.8 points.

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

BrainChip Holdings Ltd (ASX: BRN)

The BrainChip share price is down 5% to 95 cents. This is despite there being no news out of the artificial intelligence technology company. However, with a market capitalisation approaching almost $2 billion and next to no revenue being generated, investors may have concerns over its valuation.

Firefinch Ltd (ASX: FFX)

The Firefinch share price is down 11% to 29 cents. Investors appear to be struggling to value Firefinch without its lithium operations. Those operations are currently being spun off as a separate listing – Leo Lithium. In other news, there was disappointment in West Africa over Mali’s military junta government’s decision to extend the transition back to civilian rule by 24 months. Firefinch’s operations are in Mali.

Magellan Financial Group Ltd (ASX: MFG)

The Magellan share price has continued its slide and is down 4% to $12.62. Investors have been selling this fund manager’s shares this week following another disappointing monthly update which revealed a sizeable decline in funds under management. In addition, the company was dumped from the ASX 100 index.

Westpac Banking Corp (ASX: WBC)

The Westpac share price is down 6% to $22.04. Investors have been selling the banks today due to concerns over the Reserve Bank’s aggressive rate hikes. There are fears that this could create challenges for the banking sector. This includes headwinds from more expensive wholesale funding, a weaker housing and mortgage market, and a greater risk of recession.

The post Why BrainChip, Firefinch, Magellan, and Westpac shares are dropping appeared first on The Motley Fool Australia.

More reading

• Here are the 3 most traded ASX 200 shares on Wednesday
• Why are ASX 200 bank shares plunging on Wednesday?
• Westpac share price tumbles 5% on Wednesday
• ASX 200 midday update: Boral rockets, big four banks tumble
• Which ASX 200 bank is the first to pass on the full RBA rate hike?

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking 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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Listed equities of ASX banks have taken a hit on Wednesday following the Reserve Bank of Australia (RBA)’s decision to hike base rates in its policy meeting yesterday.

At its meeting, the RBA moved to increase the cash rate target by 50 basis points to 85 basis points (0.85%), citing inflation as the main undercurrent for its decision.

“Today’s increase in interest rates will assist with the return of inflation to target [2–3%] over time.”

Nonetheless, banks have felt the brunt of the RBA’s move with the S&P/ASX 200 financials index (XFJ) sliding 270 basis points towards 3-month lows today. Meanwhile, the Vaneck Australian Banks ETF (ASX: MVB) has curled down by more than 3% to $29.40.

The downward momentum appears to have spilt over to the Bendigo and Adelaide Bank Ltd (ASX: BEN) share price as well.

What’s all the fuss about?

A spike in commercial interest rates is more often than not a positive for banks net interest margins (NIMs) in the near-term.

However, as Credit Suisse analysts pointed out in their reaction to the RBA, in the long-term, such moves will likely impact asset quality – in particular, house prices.

Input from analysts at various financial services firms note there is set to be an impact to net interest income with every increase in NIM, The Australian reports.

Despite the accretion to NIMs and net income, these are offset by headwinds faced on the funding side as well, meaning the cost of finance, debt and equity will increase for banks’ as well.

Warren Buffett’s mentor, Benjamin Graham, quoted that “in the short run, the market is a voting machine but in the long run it is a weighing machine”.

That means the market will seek to price in any changes to a company’s stock based on its long-term outlook by evaluating the substance of the company.

With the longer-term outlook now shifting for ASX banks, investors appear nervous on where to position in the sector for the impeding rates-rises. Evidently, what matters is the underlying fundamentals of a business.

After a strong run this year to date, the Bendigo Bank share price has danced around the $31 level for a number of weeks before the rug was pulled out from beneath today.

As such, it has now clipped a 4.2% loss for the last 12 months, or a 3% loss this year to date.

The post Bendigo Bank share price slides 7% as ASX banking basket unwinds on Wednesday appeared first on The Motley Fool Australia.

More reading

• Can the Bendigo Bank share price surge in 2022 despite its ‘last in town position’?
• What is the current dividend yield on Bendigo Bank shares?
• Why does the Bendigo Bank share price often fare worse than the ASX big four in downturns?

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Bendigo and Adelaide Bank 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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Inflation is soaring in 2022 and the Reserve Bank of Australia lifted interest rates in its biggest hike in 22 years yesterday. That might have left Australians’ pockets feeling lighter, which is generally bad news for S&P/ASX 200 Index (ASX: XJO) consumer shares.

Tighter belts on customers often means less revenue for consumer-focused stocks.

In fact, the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) – while currently up 0.07% – has slipped 1% since the RBA’s 0.5% rate hike was announced yesterday afternoon.

Let’s take a look at 5 ASX 200 consumer shares sliding to 52-week lows on Wednesday.

5 ASX 200 consumer shares tumbling to 12-month lows

Wesfarmers Ltd (ASX: WES)

ASX 200 monolith Wesfarmers is struggling today.

The retail-focused conglomerate behind such brands as Bunnings, Kmart, and Officeworks has seen its stock slump to a new 52-week low of $44.65. That represents a 2% fall on its previous close.

Harvey Norman Holdings Limited (ASX: HVN)

The share price of $5 billion furniture and electrical retailer Harvey Norman also hit a new 52-week low today.

It slumped to $4.18 – 1.8% lower than it was at the end of yesterday’s session.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

Even pizza juggernaut Domino’s hasn’t managed to escape today unscathed.

 The ASX 200 consumer share fell 2.6% to a new 52-week low of $63.16 on Wednesday.

Eagers Automotive Ltd (ASX: APE)

And today’s suffering wasn’t only contained to ‘traditional’ food and retail stocks. ASX 200 consumer share Eagers Automotive operates car dealerships.

It’s share price hit a new 52-week low of $9.92 on Wednesday, a 2.8% lower than it was at the end of Tuesday’s session.

Breville Group Ltd (ASX: BRG)

Finally, most Australian consumers would have seen Breville products either at home or on shelves.

The company designs and manufactures small electrical appliances – think blenders, juicers, and fans.

Today, the Breville share price hit an intraday low of $18.73, representing a 2.2% fall. It also marked the lowest the stock has been in around two years.

The post Belt tightening? 5 ASX 200 consumer shares slipping to new 52-week lows today appeared first on The Motley Fool Australia.

More reading

• Domino’s share price tipped to rise 40% amid ‘absolutely undiminished’ growth opportunity
• ASX retail shares tumble following RBA rate rise
• 5 things to watch on the ASX 200 on Tuesday
• Why this top broker is tipping the Wesfarmers share price to rise 24%
• Top brokers name 3 ASX shares to buy next week

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 Harvey Norman Holdings Ltd. The Motley Fool Australia has positions in and has recommended Harvey Norman Holdings Ltd. and Wesfarmers Limited. The Motley Fool Australia has recommended Dominos Pizza Enterprises 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Apple (NASDAQ: AAPL) gets the world’s attention when it holds its developers’ conferences, as consumers, suppliers, and tech professionals all look forward to the latest innovations from the iPhone maker. Yet while many pay the closest attention to the latest product releases, the announcement on Monday of its Apple Pay Later service sent shockwaves across the fintech space.

Buy now, pay later (BNPL) specialists like Affirm Holdings (NASDAQ: AFRM) were the most obvious targets of Apple’s move. Indeed, Affirm’s stock fell 5.5% on Monday, with much of the decline coming after the conference announcement. However, Apple Pay Later further cemented a key partnership between the technology pioneer and two leading players in the financial industry, and that could pay big benefits for them for years to come.

Apple goes its own way

Apple announced that its new iOS 16 operating system software includes a new feature within the Apple Wallet. Apple Pay Later will provide the same flexibility that customers have come to expect from BNPL services from competing providers.

In particular, with Apple Pay Later, users in the U.S. will be able to take purchases for which they use the Apple Pay function in Wallet and split them into four equal payments spread out over six weeks. Apple will charge 0% interest and won’t add any fees of its own.

The drop in Affirm’s stock price in response suggests that, at least some investors had hoped that Apple would choose to go the partnership route rather than releasing its own BNPL program. The announcement last summer that Amazon.com had chosen Affirm as its BNPL partner showed just how valuable the e-commerce behemoth believed the rising fintech’s offering was. With Affirm users showing a demographic skew toward younger shoppers, investors hoped that Apple would come to the same conclusion that Amazon did and work with Affirm, rather than against it.

How Mastercard and Goldman Sachs could win from Apple Pay Later

Despite the hopes of Affirm shareholders, Apple Pay Later wasn’t a big surprise. Nearly a year ago, reports surfaced that Apple was working with key partners to develop its own BNPL service. And now that the news is out, it’s another victory for those partners: Mastercard (NYSE: MA) and Goldman Sachs (NYSE: GS).

Mastercard stands to benefit from Apple Pay Later because Apple is using Mastercard’s payment network to handle installment payments under the program. Mastercard has fought hard to distinguish itself from its larger archrival, Visa. Cementing a relationship that started when the iPhone maker chose Mastercard for its Apple Card will further boost the No. 2 payment-network provider’s reputation among consumers.

Meanwhile, although the release didn’t specifically mention Goldman, the Wall Street banking giant is likely to be the lender behind the short-term installment loans within the BNPL program. Goldman is the issuing bank for Apple Card, and its decision to work more closely with Apple came at the same time that it chose to move aggressively into the consumer-banking side of the business with its Marcus online bank.

Will Apple Pay Later be a hit?

Both Goldman and Mastercard are large enough that the Apple Pay Later news didn’t have any discernible impact on their stock prices. To reap the financial rewards of Goldman’s and Mastercard’s expanded partnership with Apple, Apple Pay Later will have to prove it can compete effectively with Affirm and its disruptive BNPL peers.

One key to Apple Pay Later’s success will be in its execution. Looking closely at the release, users will be able to apply for Apple Pay Later when they use Apple Pay to check out, but that’s no guarantee of acceptance. How strict Goldman proves to be with its underwriting could be a major factor in how consumers view Apple Pay Later and how profitable it will be for both the bank and Mastercard, as payment-network provider.

Moreover, Apple Pay Later is relatively inflexible, only offering a single repayment option. Many shoppers like other BNPL providers’ wider array of schedules for making payments, although consumer advocates have criticized the higher costs in fees and interest charges that some of them involve.

Nevertheless, being associated with Apple’s ecosystem could have long-term benefits for Mastercard and Goldman Sachs. The strength of the two financial giants’ underlying businesses makes Apple Pay Later an added bonus opportunity to boost their growth.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Apple Pay Later just crushed Affirm’s dreams, but it’s a nice win for 2 fintech giants appeared first on The Motley Fool Australia.

More reading

• Representing 40% of Warren Buffett’s portfolio, here is why Apple is a great stock to own today
• Why did ASX 200 tech shares fall today?
• Is Apple an excellent dividend stock to buy?
• Why Apple escaped Tuesday’s Nasdaq meltdown
• Why Apple stock jumped on Monday

Dan Caplinger has positions in Amazon and Apple. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Affirm Holdings, Inc., Amazon, Apple, Goldman Sachs, Mastercard, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Amazon, Apple, and Mastercard. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Shares of Mosaic Brands Ltd (ASX: MOZ) have plummeted on Thursday and are now trading at clear 52-week lows.

Sellers were active early in the session, and since the open have dumped the ASX retail share more than 56% lower, extending losses to 67% this year-to-date.

What’s up with the Mosaic Brands share price?

Investors are exiting their Mosaic Brands positions at pace following a market update released by the company today.

In the update, Mosaic detailed that overall trading conditions had fallen lower than expectations, and that FY22 would result in a loss at the bottom line. It cited risks from Omicron as the underlying cause:

The May trading month, which included the key Mother’s Day period, continued to see overall trading
conditions improve gradually, however at a rate that was below expectations, as our core customers
remained highly cautious of the ongoing risks associated with Omicron.

Despite the headwinds, online sales continue to stretch up, while in-store demand has also ticked up as COVID-19 restrictions wind back.

However, the company said it expected “to report a loss for the second half, which will result in a full year loss for FY22”, given continued disruptions to trade during the period.

“This is despite the Group delivering a profit in the first half of FY22, notwithstanding four months of lockdowns.”

In this vein, the company expects to return to profitability in FY23, according to the release, such that management was “entering FY23 in a strong and clean position to maximise the year ahead”.

Further updates are expected in July.

In the last 12 months, the Mosaic Brands share price has sunk more than 68% into the red, and 63% in the past single month of trade alone.

The post Here’s why the Mosaic Brands share price just crashed 56% appeared first on The Motley Fool Australia.

More reading

• Bendigo Bank share price slides 7% as ASX banking basket unwinds on Wednesday
• Belt tightening? 5 ASX 200 consumer shares slipping to new 52-week lows today
• Apple Pay Later just crushed Affirm’s dreams, but it’s a nice win for 2 fintech giants
• How are ASX 200 tech shares performing following the RBA rate hike?
• Here are the 3 most traded ASX 200 shares on Wednesday

Motley Fool contributor Zach Bristow 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) tech shares tend to be highly sensitive to interest rate levels, performing well in a low rate environment.

That’s because many of the big tech companies carry high price to earnings (P/E) ratios. Meaning they’re priced with growing future earnings in mind. And as the cost of future money goes up, those P/E ratios start to look stretched.

So, with the Reserve Bank of Australia (RBA) hiking the official cash rate by an unexpectedly sharp 0.5% yesterday, are ASX 200 tech shares selling off?

Not at all.

ASX 200 tech shares charging ahead

Somewhat counterintuitively, ASX 200 tech shares are leading the charge higher today, while the big banks are all deep in the red.

At the time of writing the S&P/ASX 200 Financials Index (ASX: XFJ) is down 2.6% while the S&P/ASX All Technology Index (ASX: XTX) – which contains some stocks outside of the top 200 – is up 1.5%.

That compares to a 0.4% intraday gain posted by the ASX 200.

Helping boost the tech index, the Xero Ltd (ASX: XRO) share price is up 2.2% today; shares in WiseTech Global Ltd (ASX: WTC) are up 2.8%; and the Block Inc (ASX: SQ2) share price is up 3.5%.

Why is the tech sector shrugging off the rate rise?

There’s no single reason why ASX 200 tech shares are outperforming today.

We suspect there are two prime drivers.

First, the Aussie market tends to follow the lead of United States markets. And the tech sector was a strong performer in the US yesterday (overnight Aussie time), with the Nasdaq closing up 0.9%.

Dual-listed Block – which acquired Afterpay in January – closed 1.5% higher on the New York Stock Exchange.

Second, investors may be looking past the immediate impact of a rate rise at the longer-term potential of these leading ASX 200 tech shares, all of which have been beaten down this calendar year.

How beaten down?

Despite today’s lift the WiseTech share price remains down 31.7% in 2022; the Block share price is down 34.0%; and the Xero share price has tumbled 43.9%.

So there could well be some bargain hunting afoot today.

The post How are ASX 200 tech shares performing following the RBA rate hike? appeared first on The Motley Fool Australia.

More reading

• 2 beaten down ASX tech shares that analysts rate as buys
• Why is Audinate outperforming other ASX tech shares today?
• Why Codan, Incitec Pivot, Xero, and Zip shares are dropping
• Down 13% in a month, fundie says Xero share price is ‘very reasonable’
• Why did ASX 200 tech shares fall today?

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block, Inc., WiseTech Global, and Xero. The Motley Fool Australia has positions in and has recommended Block, Inc., WiseTech Global, and 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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