Tag: Motley Fool

There are some high-quality ASX dividend shares that may compelling options for long-term income.

A handful of businesses have committed to paying investors with high levels of income.

There are more options out there than just the biggest ASX companies like Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP) and Scentre Group (ASX: SCG).

These two ASX dividend shares could be options for income:

Rural Funds Group (ASX: RFF)

Rural Funds is a real estate investment trust (REIT) that owns a large and growing portfolio of farming properties across the country.

It has a goal of growing the distribution by 4% each year for investors, which it has done so for a number of years since it listed. That goal is driven by contracted rental increases as well as productivity investments.

Rural Funds has farms across a number of sectors: cattle, vineyards, almonds, macadamias and cropping (sugar and cotton).

The ASX dividend share regularly adds to its portfolio. At the end of November 2021, it announced another acquisition. It’s buying 27,879 hectare of cattle and cropping farms across four properties in Queensland.

Those acquisitions have the potential for productivity improvements. Included in the purchase is 12,448 ML of water entitlements, which will be used to improve the productivity, including expanding irrigated cropping areas and increasing cattle carrying capacity through pasture improvement and additional water points.

Rural Funds is expecting to pay a FY22 distribution of 11.73 cents per unit, translating to a distribution yield of 4%. It is expecting to generate adjusted funds from operations (AFFO) of 11.8 cents per unit in FY22.

Metcash Limited (ASX: MTS)

Metcash is a business with operations across food, liquor and hardware. It supplies IGAs across the country and also is the second biggest hardware player in the country with Mitre 10, Home Timber & Hardware and Total Tools.

It’s currently rated as a buy by the broker Credit Suisse, with a price target of $4.55.

Credit Suisse thinks Metcash is good value and could pay a grossed-up dividend yield of 7.1% in FY22. On the broker’s numbers, the Metcash share price is valued at 15x FY22’s estimated earnings.

The ASX dividend share did just report its FY22 half-year result, which came with a 31% increase to the interim dividend to 10.5 cents per share after a 15% increase to underlying earnings per share (EPS) to 14.6 cents.

Metcash says that it has a strong focus on shareholder returns. It has successfully completed its off-market buy-back of $200 million. It now has a target dividend payout ratio of 70% of underlying profit after tax.

The second half of FY22 has seen sales growth continue, with hardware sales increasing 20.1% and playing an important part in profit generation for the business.

The post 2 leading ASX dividend shares for compelling income appeared first on The Motley Fool Australia.

More reading

• Why is the Metcash (ASX:MTS) share price smashing Coles this year?
• Here are the top 10 ASX shares today
• Why Boral, Metcash, Silver Lake, and Strike Energy shares are pushing higher
• ASX 200 (ASX:XJO) midday update: Metcash jumps, Kogan and Zip sink
• Metcash (ASX:MTS) share price jumps 7% on strong half year results

Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED. 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 shares of and has recommended RURALFUNDS STAPLED. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/338Jyb4

On Tuesday, the S&P/ASX 200 Index (ASX: XJO) was on form and stormed notably higher. The benchmark index rose 0.95% to 7,313.9 points.

Will the market be able to build on this on Wednesday? Here are five things to watch:

ASX 200 expected to rise again

The Australian share market looks set to continue its positive run on Wednesday following another strong night of trade on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 53 points or 0.7% higher this morning. In late trade in the United States, the Dow Jones is up 1.45%, the S&P 500 is up 2.1%, and the Nasdaq is trading a massive 3.1% higher.

Life360 added to ASX 200

The Life360 Inc (ASX: 360) share price could have a strong day on Wednesday. As well as benefiting from improving investor sentiment in the tech sector, the app maker’s shares have been given a boost from their inclusion in the ASX 200 index at the quarterly rebalance later this month. Life360 joins amid the exit of Oil Search Ltd (ASX: OSH) due to its merger with Santos Ltd (ASX: STO).

Oil prices jump

Energy producers such as Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) could have a great day after oil prices jumped again. According to Bloomberg, the WTI crude oil price is up 3.8% to US$72.14 a barrel and the Brent crude oil price has risen 3.4% to US$75.55 a barrel. Easing Omicron concerns and delays to Iranian crude returning to the market boosted prices.

Gold price rises

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) will be on watch after the gold price pushed higher. According to CNBC, the spot gold price is up 0.35% to US$1,785.7 an ounce. The gold price pushed higher despite Omicron concerns easing.

CBA remains a sell

The Commonwealth Bank of Australia (ASX: CBA) share price is overvalued according to the team at Goldman Sachs. According to a note, the broker has retained its sell rating on the banking giant’s shares with an improved price target of $82.57. Goldman doesn’t believe CBA’s shares deserve to trade at such a premium to the rest of the big four banks.

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

More reading

• ASX 200 retail shares lift as Aussies head into Christmas with $240bn in savings
• RBA maintains interest rate but removes 2024 reference. What could this mean for ASX shares?
• CBA share price struggling today amid sliding home buying intentions
• Here are the 3 heaviest traded ASX 200 shares this Tuesday so far
• Leading brokers name 3 ASX shares to sell today

Motley Fool contributor James Mickleboro owns shares of Life360, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Life360, Inc. 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.

from The Motley Fool Australia https://ift.tt/3DEvzXa

If you’re wanting to build a strong portfolio, then having a few blue chips in there could be a good starting point.

Blue chips are typically large companies that have been operating for many years, have stable cash flows, and experienced management teams. This can make them lower risk options and a good foundation to build a portfolio from.

But which blue chip ASX 200 shares could be in the buy zone? Here are three to consider:

CSL Limited (ASX: CSL)

The first blue chip ASX 200 share to consider is CSL. It is one of the world’s leading biotechnology companies, comprising the CSL Behring business and the Seqirus business. It appears well-placed for growth over the long term thanks to strong demand for its immunoglobulins and its lucrative research and development pipeline. Macquarie is a fan of the company and has an outperform rating and $338.00 price target

Goodman Group (ASX: GMG)

Another blue chip ASX 200 share to look at is Goodman Group. It is a leading integrated commercial and industrial property company that has been growing at a solid rate over the last decade. This has been driven by the overwhelming success of its strategy of developing high quality industrial properties in strategic locations, close to large urban populations and in and around major gateway cities globally. The team at Citi appear confident this strategy will underpin further strong growth in the years to come. Its analysts have a buy rating and $27.50 price target on its shares.

ResMed Inc. (ASX: RMD)

A final blue chip ASX 200 share to look at is ResMed. It is a sleep treatment-focused medical device company with a portfolio of industry-leading products improving the lives of sufferers of conditions such as sleep apnoea. The good news is that this is a huge market with just an estimated one fifth of sufferers currently diagnosed. This gives ResMed a long runway for growth in the future. Credit Suisse is positive on ResMed. It has an outperform rating and $43.00 price target on the company’s shares.

The post 3 strong blue chip ASX 200 shares to buy appeared first on The Motley Fool Australia.

More reading

• Leading brokers name 3 ASX shares to buy today
• Rationale behind CSL (ASX:CSL) acquisition play not ‘immediately apparent’: Macquarie
• 2 healthcare ASX shares that Morgans loves right now
• Analysts rate these ASX 200 shares as buys
• CSL (ASX:CSL) share price holds the line in November

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 shares of and has recommended CSL Ltd. The Motley Fool Australia has recommended ResMed Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3xZsmA2

Evergrande and the wider Chinese property developer sector continues to go through financial difficulties. Is Evergrande and the wider sector about to go under?

What’s happening to Evergrande?

This week alone, the Evergrande share price has dropped 19% on the Hong Kong Stock Exchange.

At the end of last week, Evergrande told the market that it had received a demand to “perform its obligations” under a guarantee for an amount of around US$260 million. If Evergrande is unable to meet its guarantee obligations or certain other financial obligations, it “may lead to creditors demanding acceleration of repayment”.

The giant Chinese real estate developer said:

In light of the current liquidity status of the Group, there is no guarantee that the Group will have sufficient funds to continue to perform its financial obligations. The Group is taking a comprehensive view in assessing its overall financial condition, considering the interests of all stakeholders, upholding the principles of fairness and legality, and plans to actively engage with offshore creditors to formulate a viable restructuring plan.

Other developers in peril?

Evergrande isn’t the only Chinese real estate developer that is currently facing financial difficulties.

In October, the Fantasia business missed a US$206 million payment.

Other Chinese real estate businesses are also seemingly in financial strife.

The business Sinic is another that has missed making a payment.

According to reporting by News.com.au on Friday, Kaisa Group Holdings Ltd warned it might not pay off its $571 million bond due next week. The online news site also reported that the developer Sunshine 100 China Holdings has missed a payment of $179 million of debt and interest payments which was due on Sunday.

What is China doing about Evergrande?

Reuters reported that Guangdong province has summoned the chair of Evergrande, Hui Ka Yan. Guangdong province is where Evergrande is based.

The Guangdong government said that it would send people to the company to “oversee risk management, strengthen internal controls and maintain normal operations”.

It was also reported that China’s central bank, banking and insurance regulator and its securities regulator sought to reassure the market with statements.

People’s Bank of China said that short-term risks caused by a single real estate firm will not undermine market fundraising in the medium and long-term. Reuters reported the China Banking and Insurance Regulatory Commission (CBIRC) said the Evergrande issue would not affect the industry’s normal operations.

News.com.au quoted Bloomberg’s Will Mathis and Tiago Ramos Alfaro:

Distress among Chinese real estate firms is spreading, amid a debt crisis at giant China Evergrande Group that’s intensifying. The broader sector strains have pushed yields on Chinese junk dollar bonds – many of which come from the industry – near record highs. That’s made it difficult for distressed developers to refinance their maturing debt in the offshore market, which has contributed to a wave of defaults.

How have ASX shares responded?

While ASX miners like BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Mineral Resources Limited (ASX: MIN) did each dip on Monday, they all have gone up today and recovered most of that lost ground.

Time will tell whether the situation worsens for Evergrande (and others) or not, and any longer-term effect that may have on ASX shares.

The post More missed payments: Is Evergrande and the China property developer sector going under? appeared first on The Motley Fool Australia.

More reading

• ASX 200 retail shares lift as Aussies head into Christmas with $240bn in savings
• Here’s why the Revasum (ASX:RVS) share price surged 33% today
• Actinogen (ASX:ACW) share price surges 9% on Oxford Uni partnership
• South32 (ASX:S32) share price slumps amid ‘concerning’ heavy metals levels in residents
• RBA maintains interest rate but removes 2024 reference. What could this mean for ASX shares?

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 Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3lIM5it

Christmas may be coming early for ASX 200 retail shares with the latest consumer survey pointing to a spending spree heading into the holiday season.

The Commonwealth Bank of Australia (ASX: CBA) today released its Household Spending Intentions (HSI) Index for November 2021, which hit its highest level since December 2019.

While the index will put a smile on the faces of ASX retailers, some are set to benefit more than others.

$240bn boost for ASX 200 retail shares

Interestingly, ASX investors may not have caught on to this just yet as just about all ASX shares in the sector rallied today. This caused the Consumer Discretionary sector to rise 1.6% when the S&P/ASX 200 Index’s (Index:^AXJO) gained just under 1%.

Expectations of a spend-a-thorn is backed by the $240 billion in savings that households have stashed away during COVID-19 lockdowns.

But as mentioned, not all retailers are likely to benefit to the same degree. The CBA’s HSI, which provides a gauge of Australian consumer spending, jumped 2.1% to 110.3 in November.

ASX 200 retail shares best placed to benefit

Within the index, spending on Transport recorded the biggest rise of 21.5%. This is followed by Travel at 14.7%, Retail at 9.6% and Household Services at 9.4%.

The strong rise in the transport category bodes well for the Ampol Ltd (ASX: ALD) share price and Bapcor Ltd (ASX: BAP) share price.

Holiday-deprived Aussies are also looking to spend big on their next getaway. Travel spending surged 77% since the Delta lockdown low in August this year, according to CBA. The biggest increases were for accommodations, travel agents, airlines and tourist attractions.

That’s good news for the Webjet Limited (ASX: WEB) share price, Flight Centre Travel Group Ltd (ASX: FLT) share price and Qantas Airways Limited (ASX: QAN) share price.

Other ASX retailers benefitting from spending spree tailwinds

Our best-known retailers will also be sharing in the Christmas cheer. Some of the strongest increases within this category are department stores, clothing, furniture & household equipment, electronic stores, and household appliances.

Some of the better placed shares in this segment are the Harvey Norman Holdings Limited (ASX: HVN) share price, the Accent Group Ltd (ASX: AX1) share price and Kogan.com Ltd (ASX: KGN) share price.

Positive outlook

The good times could continue to roll on too as the economic recovery extends into 2022.

“The CommBank HSI Index has shown a continued and broad based recovery in consumer spending since the end of lockdowns,” said CBA Chief Economist, Stephen Halmarick.

“While we have seen sharp increases in categories like transport and travel, there is still plenty of room for further growth.”

The post ASX 200 retail shares lift as Aussies head into Christmas with $240bn in savings appeared first on The Motley Fool Australia.

More reading

• RBA maintains interest rate but removes 2024 reference. What could this mean for ASX shares?
• CBA share price struggling today amid sliding home buying intentions
• Here are the 3 heaviest traded ASX 200 shares this Tuesday so far
• Why is the Flight Centre (ASX: FLT) share price soaring 6% higher today?
• Leading brokers name 3 ASX shares to sell today

Motley Fool contributor Brendon Lau owns shares of Commonwealth Bank of Australia and Webjet Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia owns shares of and has recommended Harvey Norman Holdings Ltd. and Kogan.com ltd. The Motley Fool Australia has recommended Accent Group, Bapcor, Flight Centre Travel Group Limited, and Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3oxra3X

Shares in semiconductor specialist Revasum Inc (ASX: RVS) gained an impressive 33% on Tuesday, closing the session at 58.5 cents apiece.

Revasum shares started the day on the up as investors responded positively to a company announcement made at the 10^th annual December CEO summit. Here are the details.

What did Revasum present?

In a presentation at the summit, Revasum’s CEO Rebecca Shooter-Dodd gave an in-depth overview of the company’s technology, its operations, and its outlook.

The company touts itself as a “market leader for SiC [silicon carbide] single-wafer processing solutions”.

It achieves this via a product offering of a fully-automated single water tool set comprised of the 7AF-HMG SiC grinder and the 6EZ SiC polisher.

The polisher was commercialised in FY21 and, since then, the first tool has been shipped, installed and accepted, Revasum says.

The company stated it has achieved consistent revenue growth through FY21 with a 117% quarter on quarter increase seen in Q3 FY21. It anticipates total revenue of US$13.3 million-US$15.6 million for FY21.

It also boasts “confirmed customer purchase orders of US$9.0 million as of December 4” and anticipates shipping 40-50 tools over FY22 and FY23.

What’s the outlook for Revasum?

The company also believes it is well-positioned to deliver long-term sustainable growth. The assertion comes on the back of forecasts of a 60%-125% year on year revenue increase in FY22, around US$25 million-US$35 million.

Part of this growth is said to be fuelled by a forecast 183% compound annual growth rate (CAGR) in 8-inch wafer volume between 2020-2025, demonstrating the size of Revasum’s total addressable market.

According to the company, the move to 8-inch wafers is necessary to reduce the overall cost of SiC wafers. Revasum says its tool kit is easily configured for 6-inch and 8-inch SiC wafers with customers able to easily switch between the two.

The company also expects to be free cash flow positive in FY22. It anticipates gross margins to lift with an “FY21 year to date margin of 35.4%” — a step above the FY20 margin of 31.8%. 

Aside from this, the company expects its strategy will continue growing recurring revenue streams to build into its earnings profile.

The release also notes US President Joe Biden’s announcement in 2021 for plans to invest US$52 billion in semiconductor manufacturing and research, as part of the nation’s US$2 trillion infrastructure plan.

Revasum share price snapshot

Over the past 12 months, the Revasum share price has gained almost 47% after rallying almost 68% this year to date.

It has reversed course this past month and is down 16% in that time, however, still leads the S&P/ASX 200 Index (ASX: XJO) across longer timeframes.

The post Here’s why the Revasum (ASX:RVS) share price surged 33% today appeared first on The Motley Fool Australia.

More reading

• Actinogen (ASX:ACW) share price surges 9% on Oxford Uni partnership
• South32 (ASX:S32) share price slumps amid ‘concerning’ heavy metals levels in residents
• RBA maintains interest rate but removes 2024 reference. What could this mean for ASX shares?
• CBA share price struggling today amid sliding home buying intentions
• What’s going on with the Johns Lyng (ASX:JLG) share price today?

The author has no positions 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.

from The Motley Fool Australia https://ift.tt/3oxpibr

The Actinogen Medical Ltd (ASX: ACW) share price soared today after the company announced a partnership with Oxford University.

Shares in the biotechnology company finished the day at 13 cents, up 8.7% on the previous close.

Actinogen is developing a lead compound called Xanamem, a new therapy for Alzheimer’s disease.

What did Actinogen announce today?

The Actinogen share price leapt into the green after the company revealed is is linking up with Professor Jeremy Tomlinson and the Oxford University Centre for Diabetes, Endocrinology and Metabolism.

Actinogen will supply Xanamem to researchers, enabling them to investigate its therapeutic potential for people with Mild Autonomous Cortisol Secretion (MACS). MACS is a condition linked to the over-production of the stress hormone cortisol.

Xanamem stops production of cortisol by blocking a specific enzyme in the brain. High levels of cortisol have been linked to Alzheimer’s disease, depression and other diseases.

Researchers at Oxford will conduct a 12-week clinical trial involving 40 people with MACS and funded by a UK Medical Research Council grant. The trial will evaluate the effects of Xanamem on metabolism, bone density, and cognitive function. The final results are expected in 2024.

Actinogen will supply Xanamem to Oxford free of charge and will also provide trial design support.

Commentary from management

Speaking about the news driving the Actinogen share price today, CEO and managing director Dr Steve Gourlay said:

The MACS collaboration represents an important opportunity to investigate the potential benefits of Xanamem on the cortisol system outside of the brain.

We are pleased to be working with Oxford University, an academic centre of excellence in this area.

Chief investigator of the MACS study, Professor Tomlinson, added:

This is a hugely important clinical problem and currently there are no licenced treatments. This study may not only provide a detailed understanding of the processes that drive the condition, but also offer potential for an entirely novel treatment.

Actinogen share price snapshot

The Actinogen share price is soaring this year to date, up 495%. It is also up 468% over the past 12 months.

For perspective, the benchmark All Ordinaries Index (ASX: XAO) is up 10% over the last year.

Actinogen has a market capitalisation of roughly $220 million.

The post Actinogen (ASX:ACW) share price surges 9% on Oxford Uni partnership appeared first on The Motley Fool Australia.

More reading

• Why Actinogen, AVITA, Inghams, and NAB shares are falling
• Why the Actinogen (ASX:ACW) share price is sinking 16% on Tuesday

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.

from The Motley Fool Australia https://ift.tt/3GmGtlQ

The South32 Ltd (ASX: S32) share price struggled today amid reports that dust from the company’s Gemco mine could be causing “concerning” levels of manganese in nearby residents.

According to reporting by ABC News, the Anindilyakwa Land Council – representing the traditional owners of Groote Eyland, an island in Arnhem Land – is working with South32 to lessen the dust coming from the manganese mine.

As of Tuesday’s close, the South32 share price is $3.66, 1.08% lower than it was at the end of Monday’s session.

For context, the S&P/ASX 200 Index gained 1.03% on Tuesday.

Let’s take a look at today’s news of the metals and mining company.

South32 working to reduce dust from manganese mine

The South32 share price has suffered on the ASX today.

Meanwhile, reports emerged that hair and nail samples from people residing nearby the company’s Gemco mine have been found to contain high levels of manganese.

According to ABC News, the Anindilyakwa Land Council commissioned a report into the effects of dust from manganese mines 8 years ago. Its CEO, Mark Hewitt reportedly told the publication that the report’s results can’t be released as it hasn’t been published.

The publication states that the World Health Organisation has found inhaling manganese can cause “damage to brain functions controlling dexterity as well as the respiratory and reproductive systems”.

However, the land council has decided to stop funding the research. Instead, it’s working with the company to reduce the amount of dust impacting the community. ABC News quoted Hewitt as saying:

South32, to their credit, immediately embarked on extensive measures to prevent their manganese dust entering into the communities, which are in proximity to mining activities, and that work has been going on for three to four years, and it has definitely made a significant reduction.

The company has since begun spraying the site with water and avoiding the use of machinery nearby residential areas when wind conditions would allow dust to travel.  

South32 is also reportedly monitoring to make sure dust levels don’t breach national air quality guidelines. The company’s head of external affairs, Liam Stower was quoted as saying:

That monitoring has shown that the ambient dust in the community of Angurugu is below the National Environmental Protection Measure, the NEPM guidelines, so that gives us a high level of confidence about the health and wellbeing of our community.

South32 has been mining at Gemco for more than half a century. It’s the largest Manganese mine in the world.

South32 share price snapshot

It’s been a good year so far for South32 on the ASX.

Right now, the South32 share price is 46% higher than it was at the start of 2021.

It has also gained 3% since this time last month.

The post South32 (ASX:S32) share price slumps amid ‘concerning’ heavy metals levels in residents appeared first on The Motley Fool Australia.

More reading

• Here are the 3 heaviest traded ASX 200 shares this Tuesday so far
• 10 ASX shares to buy in 2022
• Could South32 (ASX:S32) shares be poised to deliver monster dividends?
• Here are the top 10 ASX shares today
• Top brokers name 3 ASX shares to buy today

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

from The Motley Fool Australia https://ift.tt/3ELFk7j

The Reserve Bank of Australia (RBA) has made its final decision for 2021 – interest rates were kept at 0.1%. But, the RBA did remove the reference to keeping interest rates where they are until 2024.

For many months, the RBA boss Dr Lowe has been telling the market that the Australian interest rate wasn’t going to budge for years.

Just last month, in the RBA’s monthly update, it said:

If the economy evolves in line with the central scenario, wages growth is expected to have edged up to around 3 per cent and underlying inflation would have only just reached the middle of the 2 to 3 per cent target band by the end of 2023, for the first time in seven years. Depending on the trajectory of the economy at that time, the Board judges that this outcome could be consistent with the first increase in the cash rate being in 2024.

If inflation and wage growth were faster than expected, then the RBA admitted that a rate rise could happen in 2023. But, the data and forecasts did not warrant an increase in the cash rate in 2022.

Commenting on the lack of an interest rate change, Harley Dale, Chief Economist at CreditorWatch, said:

The RBA may well be contemplating the prospect of interest rates rising sooner than officially conveyed for such a long time now, but they seem happy to play Santa for now.

Conjecture regarding when the RBA will move is only going to escalate in 2022. That in and of itself is not helpful for household and, especially business confidence.

December meeting: inflation increases

In today’s statement for the December update, the RBA noted that the Australian economy is recovering from the setback caused by the Delta outbreak. High rates of vaccination and substantial policy support are helping this recovery. It doesn’t think that Omicron will derail the recovery.

Household consumption is “rebounding strongly” and the outlook for business investment has improved.

The central bank noted that leading indicators point to a strong recovery in the labour market and that further pick-up in wages growth is expected as the labour market tightens.

Regarding inflation, the RBA said:

“Inflation has increased, but, in underlying terms, is still low, at 2.1%. The headline CPI inflation rate is 3% and is being affected by higher petrol prices, higher prices for newly constructed homes and the disruptions in global supply chains. A further, but only gradual, pick-up in underlying inflation is expected. The central forecast is for underlying inflation to reach 2.5% over 2023.”

The RBA noted that house prices have increased strongly, though the rate of increase has slowed and housing loan commitments have declined.

At the February meeting, the RBA “will consider its bond purchase program”.

The RBA said the board will not increase the cash rate until actual inflation is sustainably within the 2% to 3% target range. The board is prepared to be patient because it believes this will take some time.

What does this mean for ASX shares?

The S&P/ASX 200 Index (ASX: XJO) rose in the afternoon after the latest statement. At the time of writing it is up more than 1%.

Looking at the biggest ASX shares, the Commonwealth Bank of Australia (ASX: CBA) share price is up 0.2%, the BHP Group Ltd (ASX: BHP) share price is up 1%, the Wesfarmers Ltd (ASX: WES) share price is up 0.5% and the Westpac Banking Corp (ASX: WBC) share price is up 1.2%.

It’s anyone’s guess what’s going to happen over the long-term with interest rates.

But as Warren Buffett once said, interest rates are like gravity:

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.

The post RBA maintains interest rate but removes 2024 reference. What could this mean for ASX shares? appeared first on The Motley Fool Australia.

More reading

• CBA share price struggling today amid sliding home buying intentions
• Leading brokers name 3 ASX shares to sell today
• Why did Westpac (ASX:WBC) just buy this app from AMP?
• Rio Tinto (ASX:RIO) and Fortescue (ASX:FMG) share prices hit by broker downgrade
• Could the BHP (ASX:BHP) dividend be set for a boost?

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 shares of and has recommended Wesfarmers 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 Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3ovdBBP

The Commonwealth Bank of Australia (ASX: CBA) is not enjoying the same gains as the other big 4 banks so far today.

The CBA share price is up 0.24% at time of writing at $97.47 per share after spending much of the day in the red.

As for the other big banks, the National Australia Bank Ltd (ASX: NAB) share price is up 1.07%; the Westpac Banking Corp (ASX: WBC) share price is up 1.4%, and shares in Australia and New Zealand Banking Group Ltd (ASX: ANZ) have gained 1.53% today.

For some context, the S&P/ASX 200 Index (ASX: XJO) is up 1.05% at this same time.

CBA shares came under pressure on the same day its latest housing report hit the news.

What did CommBank’s housing report indicate?

The CBA share price struggled amid data from the bank showing a huge drop in Australians’ home buying intentions.

According to the Australian Financial Review, a new report from CommBank indicates Aussie home buying intentions as at the end of November were down 17.7% over the calendar year. That fall was exacerbated by a 27.5% decline in home buying intentions recorded in November.

Would-be property buyers are getting spooked by the prospect of higher interest rates on the horizon as well as house prices that have rocketed over the past year.

CommBank also reported a decline in home loan applications while Google searches related to buying a home also fell sharply.

Commenting on the decline, CBA’s chief economist Stephen Halmarick said (quoted by the AFR):

We think the shorter time frame had an impact, particularly on the number of search activities, as people would normally sit down and do a lot of searching over the weekend, but when we look at other data, the pace of new lending to owner-occupiers and the speed of the price increases, it’s pretty clear that there’s some moderation in demand from homebuyers.

CBA share price snapshot

The CBA share price is up more than18% in 2021 so far, outpacing the 9% year-to-date gains posted by the ASX 200.

CBA shares hit an all-time high of $110.13 on 8 November.

The post CBA share price struggling today amid sliding home buying intentions appeared first on The Motley Fool Australia.

More reading

• RBA maintains interest rate but removes 2024 reference. What could this mean for ASX shares?
• Leading brokers name 3 ASX shares to sell today
• Can NAB (ASX:NAB) shares ever close in on CBA’s market cap?
• Why ANZ Bank (ASX:ANZ) is losing market share to other big ASX banks
• Could interest-paying crypto accounts be coming to a CBA (ASX:CBA) branch near you?

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.

from The Motley Fool Australia https://ift.tt/31r8xpD