With the resources sector performing very strongly in 2022 and its outlook becoming increasingly positive, investors may be looking for mining shares to buy.

If you are, then you might want to take a look at the two mining shares listed below which are highly rated by brokers. Here’s what you need to know about them:

Iluka Resources Limited (ASX: ILU)

The first ASX mining share that could be in the buy zone is Iluka. It is a mineral sands and rare earths producer with a number of quality operations across South Australia, Western Australia, and Sierra Leone.

Goldman Sachs is very positive on the company due to its attractive valuation and the favourable outlook for mineral sands and its exposure to rare earths.

The broker commented: “ILU is trading at a >50% discount to RE peers and >10% discount to min sands/pigment peers on an EV/EBITDA basis. Iluka recently released a larger-than-expected maiden resource on the Wimmera rare earth (RE) & zircon deposits in Victoria containing over c.1Mt of rare earth oxides (REO) and 10.6Mt of zircon. The Wimmera deposit is an important part of ILU’s rare earth growth strategy,” Goldman added.

Goldman Sachs currently has a conviction buy rating and $12.50 price target on Iluka’s shares. This compares favourably to the latest Iluka share price of $10.09.

Santos Ltd (ASX: STO)

Another mining share that could be in the buy zone is Santos. Although its shares have risen strongly in recent months, the team at Morgans still sees plenty of value in them. Particularly given its resilient growth profile and diversified earnings base.

The broker explained: “We expect the resilience of STO’s growth profile and diversified earnings base see it best placed to outperform against a backdrop of a broader sector recovery. While pre-FEED, we see Dorado as likely to provide attractive growth for STO, while its recent acquisition increasing its stake in Darwin LNG has increased our confidence in Barossa’s development.”

Morgans has an add rating and $9.00 price target on its shares. This compares to the latest Santos share price of $7.40.

The post Why brokers love these ASX mining shares appeared first on The Motley Fool Australia.

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• Why Chalice Mining, Santos, Yancoal, and Zip shares are dropping
• Why is the crude oil price tumbling and which ASX 200 shares are being impacted?
• 5 things to watch on the ASX 200 on Tuesday

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 Bruce Jackson.

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With the US Federal Reserve this week lifting its cash rate, many experts feel it’s inevitable Australia will follow in the coming months.

The fact is that even if the Reserve Bank of Australia disagrees, Australia’s rate can’t diverge too far off the US’. This is because the Australian dollar could otherwise skyrocket in value, causing our exports to collapse.

Considering this ominous situation, WAM Leaders Ltd (ASX: WLE) analyst Anna Milne had three ASX shares in mind that would be prudent buys right now.

Australians still have to eat

Milne said her team has analysed past cycles of high inflation, rate hikes, and the post-hike market.

“In all of these situations, consumer staples outperform the market,” she told a conference call to clients this month.

“Within consumer staples, we like the supermarkets. It makes sense that when inflation is high, consumer balance sheets and budgets are stretched — and people eat out less.”

Among the supermarket ASX shares, she favours Coles Group Ltd (ASX: COL) after a “really good” results season when it reported “extreme cost discipline” over a “challenging period” of Omicron and Christmas.

“Previously, Coles has not been as good as Woolworths Group Ltd (ASX: WOW) at managing its costs and that’s one of the reasons why there is a valuation differential between the two,” she said.

“However, delivering the result it just did, it brings a differential into question, which is one of the reasons why we prefer Coles over Woolworths currently.”

Coles shares closed Thursday at $17.78, down 1.28%.

Healthcare giant ready to take off again

The share price for CSL Limited (ASX: CSL) hasn’t really gone anywhere since the ASX share’s big acquisition of Swiss company Vifor Pharma in December.

But Milne reckons the market is underestimating the healthcare giant.

“Going into January, into the start of February, we saw a few green shoots across the business,” she said.

“We have since met with management and have even more confidence in the medium-term outlook for the business.”

Milne listed rising plasma collections, new plasma devices and the influenza vaccine as some of the tailwinds about to push CSL stocks upwards.

“I think, more importantly than that, it is one of the most high-quality names on the ASX, with a great management team. So it remains a core holding of ours.”

CSL shares are down 8% for the year so far. They closed Thursday at $270.59, up 0.77% on the day.

Insurance stock pick that’s not QBE for once

While it is generally acknowledged insurance companies would benefit from higher interest rates, most analysts seem to pick QBE Insurance Group Ltd (ASX: QBE) as their favourite.

Not Milne though.

“Insurance Australia Group Ltd (ASX: IAG) reported a really good February result,” she said.

“We have since met with the management team and we are confident that the legacy issues are behind them and they are now focused entirely on the future of the company, earnings growth and the outlook.”

IAG is already cashing in on “strong rates in the insurance cycle”.

“They benefit from rising rates in the financial market. They have a cost-out program and capital management on the way,” Milne said.

“We don’t think any of this is reflected in the share price, so that is another core holding of ours.”

QBE shares finished Thursday at $10.91, up 0.46%.

WAM Leaders shares closed at $1.53 on Thursday afternoon, which is up 2% this year. The listed investment company was trading at a 3.4% premium to net tangible assets as of 28 February.

The post Why expert says this supermarket ASX share is a better bet than Woolworths (ASX:WOW) appeared first on The Motley Fool Australia.

More reading

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• The Woolworths (ASX:WOW) share price has only added $4 in 8 years. Have the dividends been worth it?
• Is the CSL share price heading back over $300 in 2022?

Motley Fool contributor Tony Yoo owns CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended CSL Ltd. The Motley Fool Australia owns and has recommended COLESGROUP DEF SET and Insurance Australia Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Experts have named some leading ASX dividend shares as buys.

A business isn’t necessarily rated as a buy just because it pays a dividend. Analysts are judging whether they think the current valuation is attractive.

COVID-19 has shown that share prices can be very volatile. However, dividends are decided by the boards of companies, so they can be more consistent than share prices.

Here are two buy-rated ASX dividend shares that are expected to pay solid yields:

Coles Group Ltd (ASX: COL)

Coles is one of the biggest supermarket businesses in Australia, along with Woolworths Group Ltd (ASX: WOW).

It’s currently rated as a buy by multiple brokers, including Morgans. The broker currently has a price target on the business of $19.70. That suggests a possible rise of the Coles share price of around 10% over the next year.

According to Morgans, in terms of the potential dividend, Coles has a forecast grossed-up dividend yield of 4.9% in FY22 and 5.1% in FY23.

Morgans expects Coles to generate 75 cents of earnings per share (EPS) in FY22. That means the Coles share price is valued at 24x FY22’s estimated earnings.

In terms of the most recent trading update, Coles said that it experienced elevated supermarket sales in early January as the Omicron COVID-19 variant spread through the community. However, sales moderated later in the month.

The ASX dividend share is investing in a store renewal program, as well as continued investments in e-commerce and the Witron and Ocado transformation projects with its distribution centres.

Centuria Industrial REIT (ASX: CIP)

This is a real estate investment trust (REIT) focused on high-quality industrial properties.

It’s currently rated as a buy by the broker Morgan Stanley with a price target of $4.35. That’s around 10% higher than today’s valuation.

The business has around 80 properties worth approximately $4 billion. About 90% of its portfolio is located on Australia’s eastern seaboard.

Centuria Industrial REIT’s property portfolio has a weighted average lease expiry (WALE) of 8.9 years, providing the business with long-term income visibility. Its portfolio occupancy was 99.2% on 31 December 2021.

It’s experiencing a high level of income growth. In the first half of FY22, its average rental growth was 10% higher than prior passing rents.

The ASX dividend share has provided guidance of a distribution of 17.3 cents per unit for FY22. At the current Centuria Industrial REIT share price, that represents a distribution yield of 4.4%.

Centuria Industrial REIT is expecting to see further rental growth, the REIT’s manager Jesse Curtis has recently said:

With demand for industrial space expected to remain elevated, thanks to customer shifts to e-commerce plus onshoring to maintain supply chain resilience, and with limited supply within urban infill markets, we expect to see industrial rents continue to rise.

The post 2 ASX dividend shares to buy for this year and beyond: experts appeared first on The Motley Fool Australia.

More reading

• Why expert says this supermarket ASX share is a better bet than Woolworths (ASX:WOW)
• Brokers name 2 excellent ASX dividend shares with big yields to buy
• Why has the Coles (ASX:COL) share price rallied 7% in a month?
• 2 excellent ASX dividend shares analysts rate as buys
• The Coles (ASX:COL) dividend beats Woolworths. Does that make it a better income share?

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 owns and has recommended COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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On Thursday, the S&P/ASX 200 Index (ASX: XJO) was a strong performer for a second day in a row. The benchmark index rose 1.05% to 7,250.8 points.

Will the market be able to build on this on Friday and end the week on a high? Here are five things to watch:

ASX 200 expected to rise

The Australian share market looks set to end the week on a positive note following a decent night of trade on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 38 points or 0.5% higher this morning. In late trade in the US, the Dow Jones is up 0.65%, the S&P 500 is up 0.7%, and the Nasdaq is up 0.7%.

Oil prices jump

Energy producers including Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) could have a strong finish to the week after oil prices jumped. According to Bloomberg, the WTI crude oil price is up 9.2% to US$103.77 a barrel and the Brent crude oil price is up 9.4% to US$107.34 a barrel. This comes amid warnings from the IEA that supply is expected to fall more than demand.

Megaport selldown

The Megaport Ltd (ASX: MP1) share price will be on watch today following reports that a major shareholder is selling down their holding. According to the AFR, company founder and chairman Bevan Slattery is rumoured to have sold 3 million shares at a discount of $13.05 per share. This valued the stake at $40 million. The Megaport share price was fetching $14.14 at the close of play yesterday.

Gold price rebounds

Gold miners Newcrest Mining Ltd (ASX: NCM) and St Barbara Ltd (ASX: SBM) could have a good finish to the week after the gold price rebounded. According to CNBC, the spot gold price is up 1.7% to US$1,941.10 an ounce. Demand for safe haven assets boosted the precious metal.

Carsales goes ex-dividend

The Carsales.Com Ltd (ASX: CAR) share price could end the week in the red. That’s because this morning the auto listings company’s shares are trading ex-dividend for its fully franked 25.5 cents per share interim dividend. This dividend will then be paid to eligible shareholders next month on 19 April. Hub24 Ltd (ASX: HUB) shares are also trading ex-dividend today.

The post 5 things to watch on the ASX 200 on Friday appeared first on The Motley Fool Australia.

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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. owns and has recommended Hub24 Ltd and MEGAPORT FPO. The Motley Fool Australia owns and has recommended Hub24 Ltd. The Motley Fool Australia has recommended MEGAPORT FPO and carsales.com Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Transurban Group (ASX: TCL) maybe a road toll operator, but will rising fuel prices impact the share price?

Transurban shares climbed 2% on Thursday to finish the day at $13.22.  For perspective, the S&P/ASX 200 Index (ASX: XJO) lifted 1.05%.

Let’s take a look at what is likely at play for the company.

Could rising petrol prices impact toll road revenue?

Transurban builds and operates toll roads in Sydney, Melbourne and Brisbane.

Oil prices have recently hit 13-year highs amid the Russian invasion of Ukraine. Brent crude oil prices reached nearly US$140 per barrel in early March. The international benchmark Brent Crude is priced at US$99.65 per barrel at the time of writing, according to Bloomberg.

However, broker Macquarie believes there is scant evidence fuel price increases will impact the road toll operator.

Macquarie has placed a $14.96 price target on the company’s shares. This is 13% higher than Thursday’s close.

Macquarie, quoted in the Financial Review, said:

Transurban has always remarked, in their experience, there is a very weak relationship to fuel price movements. This appears to be supported by academic research which cites elasticity of negative 0.04.

In October 2007, when fuel increased 18 per cent, M4 and M5 (Sydney motorways) traffic was either stable or higher. In theory, it should have fallen 0.7 per cent assuming the elasticity holds.

The team at Morgans also recently placed an add rating and $14.29 price target on the company’s shares, my Foolish colleague James reported. The company said:

We think TCL will continue to be attractive to investors given its market cap weighting (important for passive index tracking flows), the high quality of its assets, management team, balance sheet, and growth prospects. 

Transurban share price snapshot

The Transurban share price has lifted just 1% in the past 12 months, while it has lost 4% year to date.

In the past month, Transurban shares have gained nearly 3%, while they have soared nearly 6% in the past week

Transurban has a market capitalisation of about $40.6 billion based on its current share price.

The post Worried about how rising petrol prices might impact the Transurban (ASX:TCL) share price? Read this appeared first on The Motley Fool Australia.

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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. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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If you’re looking for ASX shares to buy and hold, then you may want to consider the two listed below.

Both have been named as buys and tipped for big things in the future. Here’s what analysts are saying:

Lovisa Holdings Limited (ASX: LOV)

The first ASX share to look at this fast-fashion jewellery retailer. Lovisa has been growing at a solid rate for a number of years and appears well-placed to continue this trend thanks to its global expansion.

The team at Morgans appear confident that this will be the case and are particularly bullish on Lovisa’s future. Especially after the release of a “remarkable” first half result last month.

In respect to the future, the broker said: “LOV may just prove to be one of the biggest success stories in Australian retail. With ambitious (and financially well-incentivised) new leadership in place, we think now is the time LOV steps up to become a global force. Investment will be needed to expand LOV’s network in the US and Europe and to take it into new markets, but the returns could be stellar.”

Morgans has an add rating and $24.00 price target on its shares.

Xero Limited (ASX: XRO)

Another ASX share to consider buying is Xero. It is a leading cloud-based business and accounting software provider which boasts over 3 million subscribers globally.

Xero’s shares have come under significant pressure this year after being caught up in the tech selloff. While this is disappointing, the team at Goldman Sachs sees this as a buying opportunity.

It commented: “The ASX All Tech index has largely fallen in line with increasing real yields, with sector valuation now below pre-COVID levels while fundamentals are arguably stronger given the pandemic accelerated cloud/ technology adoption.”

In fact, Goldman is forecasting a 24% compound annual growth rate for Xero’s gross profit between FY 2021 and FY 2025. It has also previously suggested that Xero has what it takes to deliver strong growth over multiple decades.

As a result, the broker is very positive on the future and recently retained its buy rating with a trimmed price target of $135.00.

The post Brokers name 2 excellent ASX shares to buy and hold appeared first on The Motley Fool Australia.

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• Guess how much $5,000 invested in Xero (ASX:XRO) shares 10 years ago would be worth now
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• Top brokers name 3 ASX shares to buy next week
• ASX 200 (ASX:XJO) midday update: Block falls, Nickel Mines jumps
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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. owns and has recommended Xero. The Motley Fool Australia owns and has recommended Xero. The Motley Fool Australia has recommended Lovisa Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The BHP Group Ltd (ASX: BHP) share price was on the rebound today, posting its first gains in more than a week.

Shares in the world’s second-largest miner were swapping hands for $45.68, up 1.11% at the market close today.

What’s driving BHP shares higher?

There may be a few factors contributing to the BHP share price move into positive territory today.

Firstly, the ascent of iron ore prices is providing a strong support base for the company’s margins. This is particularly important given the majority of revenue come from the steelmaking ingredient, BHP’s key commodity.

Currently, the price of iron ore is fetching US$141.50 a tonne, up 3.66% in the past 24 hours.

It’s worth noting that in the financial year ending 31 December 2021, iron ore accounted for more than half of the total group revenue from BHP.

In addition, the S&P/ASX 200 Resources (ASX: XJR) index has also pushed ahead, advancing 0.97% to 5,534.1 points.

The sector represents 48 of the largest companies in the S&P/ASX 200 that are members of the energy, metals and mining industry.

A positive shift in investor sentiment toward the index is likely to have propelled BHP shares forward.

In addition, commodity prices spiked when Russia attacked Ukraine on 24 February.

Lastly, analysts at Macquarie updated their outlook on BHP shares last month. The broker raised the 12-month price target by 6% to $54 apiece, representing a potential upside of around 20%.

BHP share price summary

Despite remaining relatively unchanged for the past 12 months, BHP shares have stormed 10% higher in 2022.

Investors heavily sold off the company’s shares in August 2021 after reaching an all-time high of $54.55. Since then, its shares hit a 52-week low of $35.56, before surging to late August levels of around the $45 mark.

Based on today’s price, BHP presides a market capitalisation of roughly $231.09 billion and has approximately 5.06 billion shares outstanding.

The post BHP share price rebounds after 9-day slide. Here’s why appeared first on The Motley Fool Australia.

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

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Who will end up owning Australian Pharmaceutical Industries Ltd (ASX: API) has been one of the biggest questions on the markets over the past year or so. API, the company behind the Priceline chain of pharmacies, has been sought after by both Wesfarmers Ltd (ASX: WES) and Woolworths Group Ltd (ASX: WOW). Now, it looks as though it will be Wesfarmers shares that will end up with API alongside them.

The ASX 200 industrial and retail conglomerate has lobbed a series of bids API’s way over the past 12 months. The most recent (and perhaps winning) bid being $1.55 per API share. But these were turned into a bidding auction or sorts when Woolies entered the fray with a higher bid of $1.75 per share. But the grocery giant bowed out of the courtship at the start of this year. As such, this leaves Wesfarmers as the only company that looks like it will take API’s hand.

Wesfarmers shares looking set to take in API

This merger took another step forward today as well. Hence why the Wesfarmers share price was in focus. As revealed by the Australian Financial Review (AFR) today, 97% of the proxy votes received by both API and Wesfarmers thus far have been in affirmation of the takeover. The vote closes tomorrow. These positive votes included some major institutional investors. These included Investors Mutual. Investors Mutual has a 4.2% stake in API, so its vote has obvious sway.

Another major API investor in Australian Ethical Investments Ltd (ASX: AEF) has reportedly already given its own green light.

According to the report, API shareholders’ votes “were understood to be nearly 90 percent favouring [the] deal”. This, together with the already-mentioned blessings of Wesfarmers shareholders, “make the scheme irrevocable”.

So it looks as if Wesfarmers is set to add yet another retail business to its bulging portfolio of brands. Wesfarmers already owns K-Mart, OfficeWorks and (of course) Bunnings.

The Wesfarmers share price had a positive day today, recording a gain of 0.32% by market close at $50.64 a share. That gives this ASX 200 blue-chip share a market capitalisation of $57.42 billion, with a dividend yield of 3.36%. 

The post Wesfarmers (ASX:WES) shares in focus as API deal looks all but sealed appeared first on The Motley Fool Australia.

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• Own Wesfarmers (ASX:WES) shares? Here’s how the numbers are looking in the API takeover vote
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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 owns and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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A seismic shift has taken place over recent years with the rise of environmental, social, and governance (ESG) investing.

Investors can opt to concentrate on one ESG element, such as social responsibility, or incorporate all three into their decision-making.

ESG is even now considered an investment ‘factor’ that professionals use to benchmark and weight portfolios against – not unlike value or growth factors.

The ESG sector has underperformed so far in 2022. However, this isn’t surprising given the enormous rally that commodities have staged, as seen below.

New ESG trends emerging

Gone are the days when the mantra of ‘creating shareholder value’ was front and centre of public companies’ earnings transcripts.

The public – not just investors – are starting to hold ASX companies and even entire industries accountable for ESG.

This has resulted in the formation of a novel and widening market that is presenting more and more opportunities. That’s the expert opinion of Anthony Miller, chief executive of Westpac Institutional Bank.

Westpac economists conducted a survey in 2019, and again this year, to assess the state of the ESG market.

“Our new research, which expands on the approach in 2019, reveals a market that has grown not just in size, but in diversity and sophistication,” Miller wrote in a Westpac report titled Financing for sustainability: Asia Pacific’s evolving ESG market.

“The majority of investors and issuers in the region are taking climate matters into their own hands and are actively pursuing the decarbonisation of their businesses and portfolios through sustainable finance.”

Other findings in the new survey also show a behavioural shift in sustainable financing for both investors and issuers.

“A sustainable approach to business has become a core corporate requirement,” Miller added. He noted that ASX investors are becoming increasingly aware of the impacts of climate risks and litigation on their assets.

Assets under management (AUM) designated to ESG themes has also spiked considerably. About 66% of investors now hold more than 25% of their AUM in sustainable investments, the Westpac study finds.

Not only that, but 50% of investors anticipate allocating the majority of their net worth to sustainable investments by 2025.

But what are the benefits?

Perhaps the biggest benefits to ESG investing is the mitigation of climate risk and proper diversification, Miller says.

“That main driver is now improved management of ESG risk (24% of respondents), although investing for sustainability or impact outcomes continued to rank second (23%) and remains a strong motivator.”

The greater diversity of products has ensured more sophisticated investors are participating in the ESG segment. The presence of “non-financial benefits” is starting to weigh heavily, too.

Westpac’s institutional boss explains:

Among investors, the reputational and financial benefits they derive from sustainable investments are a significant driver of demand.

Over three quarters (77%) agree or strongly agree that their sustainable investments have performed better financially than equivalent traditional investments, and 83% agree or strongly agree that their sustainable investments have had a greater positive impact on their organisation’s reputation than traditional investments.

Quite importantly, Miller notes that both investors and issuers say ESG investing has been beneficial to them.

That’s all fine and dandy, but someone has to bear the costs, seeing as the two parties are on opposite sides of the transaction. Just who that is, Miller doesn’t speculate.

Westpac Banking Corporation (ASX: WBC) shares finished today’s session slightly down by 0.04% to $23.68.

The post What are the real benefits of ESG investing? Here’s what Westpac says appeared first on The Motley Fool Australia.

More reading

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• Why has the Westpac share price rallied 8% in a week?
• Own Westpac shares? Here’s why change is afoot
• 2 ASX dividend shares analysts say are buys now
• Why ASX 200 bank shares are storming higher today

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 recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Bitcoin (CRYPTO: BTC) price is up 5% over the past 24 hours.

The world’s first crypto is currently trading for US$41,012 (AU$56,764). That gives it a market cap of US$781 billion, according to data from CoinMarketCap.

The Bitcoin price is now up 2% over the past 7 days, though it remains down 14% year-to-date.

How will the Bitcoin price fare as interest rates rise?

Yesterday (overnight Aussie time) the US Federal Reserve raised its official interest rate by 0.25%. This was the first rate rise from the world’s most watched central bank since 2018.

So, does this mean that the Bitcoin price is likely to continue higher amid a series of expected interest rate increases?

Not so fast.

It’s not only Bitcoin that’s gained following the US rate hike. Most growth shares leapt higher as well.

The tech-laden Nasdaq, for example closed up 3.8%. And here in Australia technology shares led the charge, with the S&P/ASX All Technology Index (ASX: XTX) up 3.5% in the final minutes of trading.

The risk-on sentiment was spurred not by the rate rise. But by US Fed Chair Jerome Powell’s bullish outlook for the US economy, the world’s largest.

What the experts are saying

According to Marcus Sotiriou, an analyst at digital asset broker GlobalBlock (quoted by Bloomberg):

Whenever we see stock market relief, crypto tends to do well, especially lately. At the end of the day, the key driving force behind prices is macro, so I expect a struggle for a sustainable uptick.

Joel Kruger, a strategist at crypto exchange LMAX Digital is decidedly bearish on the outlook for the Bitcoin price as rates rise.

“Rates going higher will strangle equity markets. So, if we see a mass exodus out of risk assets, it’ll weigh on everything… New lows in stocks could contribute to a decline in crypto assets,” he said.

Kruger forecast that if the Fed pursues a hawkish tightening cycle, the Bitcoin price could fall to US$20,000.

With interest rates moving higher in an effort to stem fast rising inflation, Ryan Nauman, market strategist at Zephyr, is doubting that the range bound Bitcoin price can live up to its billing as a potential inflation hedge.

“Investors are still trading it short-term in this range and it can’t really bust out. It makes me more sceptical of its long-term viability as an inflation hedge and whether it’s a competitor to the US dollar as a reserve currency,” he said.

The post What’s ahead for the Bitcoin price in 2022 amid rising interest rates? appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Bitcoin. The Motley Fool Australia owns and has recommended Bitcoin. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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