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The Coles Group Ltd (ASX: COL) share price will be in focus on Thursday.

Hot on the heels of a first quarter update from Woolworths Group Ltd (ASX: WOW) yesterday, Coles has released its own this morning.

What happened in the first quarter?

During the three months ended 30 September, the supermarket giant reported a 1.5% increase in total sales to $9,756 million. This growth was driven by its Supermarket and Liquor businesses, which offset weakness in the Express business.

Supermarkets sales increased 1.8% over the prior corresponding period to $8,620 million and 1.4% on a comparable store basis. Management advised that as a result of lockdowns, there was a return to local shopping at the expense of shopping centres. In addition, the company experienced increased demand for eCommerce, resulting in strong online sales growth of 48%.

Coles’ Liquor sales rose 2.6% to $874 million or 1.4% on a comparable store basis. This reflects higher home consumption due to the closure of on-premise venues in New South Wales, the Australian Capital Territory and Victoria for most of the quarter.

Finally, the Express business reported a sizeable 10.1% decline in sales to $262 million. This reflects the impact of lockdowns during the quarter.

COVID costs

Coles revealed that it incurred COVID-19 costs of approximately $75 million (inclusive of team member discounts) in the first quarter with costs accelerating in August and September.

This was largely due to the approximately 20,000 team members required to isolate in New South Wales and Victoria, additional door greeters to ensure QR code compliance in store, and lower productivity due to shift bubbles in distribution centres.

COVID-19 costs are expected to peak in October and then start to moderate in November and December due to recent changes in isolation policies.

Management commentary

Coles’ CEO, Steven Cain, commented: “As we embarked on our third year of strategy execution, the COVID-19 Delta strain presented significant challenges in the quarter, which are now beginning to ease as vaccination rates increase. I would like to thank the Coles team, our suppliers and community partners who have done an extraordinary job in this 18-month battle with COVID-19 to ensure continuity of supply as an essential service.”

“We are now looking forward to providing a safe and happy Christmas and summer season, serving Australians with more sustainable, great value and easy entertaining inspiration – for what we expect will be a record number of smaller gatherings for families and friends.”

Outlook

The second quarter of FY 2022 has started positively, with Supermarkets comparable sales broadly in-line with the first quarter.

In Express, current fuel volumes are impacting profitability, however volumes are expected to recover in the second half as consumer behaviours normalise and mobility increases.

Outside this, management is optimistic on the future and particularly the important Christmas period.

It commented: “With the end of significant COVID-19 restrictions in sight, consumer savings at an all time high, and the recent launch of a new large range of great value easy entertaining, Coles is optimistic for the Christmas and holiday period as families and friends get together again.”

The post Coles (ASX:COL) share price in focus following Q1 update appeared first on The Motley Fool Australia.

More reading

• Need a COVID test? Now you can buy one at Coles (ASX:COL) or Woolies
• Own Coles (ASX:COL) shares? Here’s the retailer’s latest push for supremacy
• 2 blue chip ASX dividend shares rated as buys
• Why is the Woolworths (ASX:WOW) share price underperforming Coles lately?
• Is Coles (ASX:COL) a must-buy dividend share for income investors?

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 owns shares of 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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There are quite a few ASX growth shares that have experienced a high level of development over the last couple of years.

Not every business has seen revenue growth since the onset of COVID-19. The ASX travel sector has seen a reduction in volume.

However, there are some businesses out there that are expecting to achieve quite a bit of growth in the coming years:

Redbubble Ltd (ASX: RBL)

This is an e-commerce business which sells a variety of items that have unique artist designs on them such as phone cases, clothes, bags, wall art and so on. Redbubble pays a portion of its gross revenue to the artist who made the design.

There has been a boom of e-commerce demand over the last couple of years. On top of that, Redbubble generated millions of dollars of revenue from masks. That’s unlikely to be repeated in FY22, so management hope that FY22 revenue will be similar to underlying FY21 revenue (which excludes masks).

The ASX growth share believes it’s operating in a sector with a huge addressable market (around US$300 billion) – people can put designs on a lot of different products.

To take advantage of that sizeable opportunity, Redbubble is planning to invest heavily to attract new customers and new artists, retain existing customers and artists, become more efficient and become more profitable.

Redbubble is aiming for $1.25 billion of annual marketplace revenue (after paying the artists) in the next few years. Its profit margins are expected to be low during this period of heavy investment.

The broker currently rates the Redbubble share price as a buy, with a price target of $6.50.

Pushpay Holdings Ltd (ASX: PPH)

Pushpay say it’s the leading resource for church growth, engagement, and management that helps facilitate generosity and participation. It also says that technology is a key element to unlocking generosity from a changing generation.

The company has been steadily expanding its available offering to clients with acquisitions, such as Church Community Builder and Resi Media. This has increased its earnings diversification and market share, giving it greater tools relating to church management and video streaming.

The ASX growth share continues to increase in size. Operating revenue went up 40% to US$179.1 million.

Pushpay says that it adopted best-in-class software tools and scalable processes early in its development. Combined with “strong financial discipline”, management believe these investments will allow “significant” operating leverage to be achieved as revenue grows.

Growing profit margins were demonstrated in the FY21 result. The gross profit margin increased from 65% to 68%. The earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) margin improved from 22% to 34% over the year.

But Pushpay has more plans for growth over the coming years. The company has said:

In the long-term, Pushpay is targeting to increase the appeal of our products to new customers and increase the revenue per customer through continued innovation, and merger and acquisitions.

The Catholic initiative is our first step in investing to grow our customer base outside of our existing core customer base and we have set the goal of acquiring more than 25% of the Catholic church management system and donor management system market over the next five years.

The post 2 top ASX growth shares that could be buys appeared first on The Motley Fool Australia.

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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. owns shares of and has recommended PUSHPAY FPO NZX. The Motley Fool Australia owns shares of and has recommended PUSHPAY FPO NZX. 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 Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price will be one to watch on Thursday.

This follows the release of the banking giant’s full year results this morning.

ANZ share price on watch after strong profit growth

• Statutory profit after tax up 72% to $6,162 million
• Cash earnings from continuing operations up 65% to $6,198 million
• Earnings per share up 65% to 218.3 cents
• Fully franked final dividend of 72 cents per share
• Full year provision release of $567 million and collective provision release of $823 million
• CET1 ratio up 100 basis points to 12.3%
• $6 billion of capital above of APRA’s requirements

What happened in FY 2021?

For the 12 months ended 30 June, ANZ reported a 65% increase in cash earnings from continuing operations to $6,198 million. This was driven largely by a significant reduction in provisions compared to the prior corresponding period, tightly managed expenses, and profit growth in Australia Retail and Commercial, which offset notably weaker Markets income.

ANZ’s Chief Executive Officer, Shayne Elliott, explained: “This year demonstrated the benefits of our diversified portfolio as we provided solid returns for shareholders while also successfully navigating the continuing impacts of COVID-19 on our customers and our people.”

“Australia Retail & Commercial grew lending and customer deposits during the year and delivered good margin performance across the division. Home loan revenue growth was in the low double digits. However, second half volumes were impacted by a competitive refinancing market, customers paying down their loans faster and processing issues. We have been working on a range of improvements and they are already having a positive impact on processing times.”

Mr Elliott was also pleased with the performance of the bank’s Institutional business.

He commented: “Institutional delivered another consistent performance, reflecting the benefits of a simpler, more diversified franchise. This is a business providing sustainable returns well above the Group cost of capital. Markets revenue just below $2 billion in the current environment is testament to its strength and diversity as well as prudent risk settings.”

How does this compare to expectations?

The good news for shareholders and the ANZ share price is that this result appears to have come in ahead of expectations.

For example, a note out of Morgans reveals that it was expecting the banking giant to report cash earnings from continuing operations of $6,017 million. This is broadly in line with consensus estimates.

In addition, the broker was forecasting a fully franked 69 cents final dividend. Whereas ANZ declared a 72 cents per share dividend.

Outlook

No guidance has been provided for FY 2022. However, management spoke optimistically about the future.

Mr Elliott commented: “Experience tells us the real impacts of COVID-19 will not be fully understood until at least the end of 2022, however we’re well positioned financially and culturally to respond. There will be opportunities that arise and we are investing for growth with the mindset and agility to continue to deliver for customers, shareholders and the community.”

The ANZ share price is up 23% in 2021.

The post ANZ (ASX:ANZ) share price on watch after FY21 profit surge appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
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• Own ANZ (ASX:ANZ) shares? Here’s what the bank’s CEO is warning on ‘greenwashing’

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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Ask A Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. Yesterday, Leithner & Co joint managing director Chris Leithner told how he created his investment company to be an Australian version of Berkshire Hathaway. Now he reveals the 3 ASX shares that are its biggest holdings.

MF: What are your two biggest holdings?

CL: On 30 September, the two biggest were Origin Energy Ltd (ASX: ORG) and Perpetual Limited (ASX: PPT). Today, Platinum Asset Management Ltd (ASX: PTM) is the biggest, followed by Perpetual.

We’ve usually owned what by mainstream standards is a concentrated portfolio. At any given point in time, we’ve typically held 10 to 15 investments — currently 12.

Three themes describe Leithner & Company’s portfolios over the years. First, well-established and leading enterprises have been heavily over-represented. Of our current holdings, several — like Perpetual — trace their roots to the 19th century. Others — like Origin — originated in the mid-20th century. Only Platinum, which was established in the 1990s, is a comparative newcomer. 

We need to be able to make a conservative estimate of what a business, hence its securities, are worth. With startups, small caps and the like, it’s not generally possible for us to ascertain what the business is worth, so we just avoid them and tend to stick with major businesses with long and solid operating histories.

Having said that, Perpetual would be in the S&P/ASX Small Ordinaries Index (ASX: XSO). Platinum, I think, is in the Small Ords.

Second, considered as a whole, these major companies develop, own and operate critical, long-life and world-class infrastructure. They also provide essential goods and services. 

As a third theme, the companies in our portfolios have possessed mostly solid operating histories in the years and decades before we purchased their shares. More recently, they’ve encountered various difficulties. These problems, which our independent and comprehensive research led us to conclude were surmountable or ephemeral, depressed the prices of these companies’ shares below our conservative assessment of their long-term value. 

We intend to hold for 5 years plus. In the meantime, we collect our dividends. Most of the time these things go reasonably well. 

The vast majority of time, if we bought something and then a year or 2 later the price is lower than it was when we bought it, typically, what we do is buy more of it rather than sell it. That’s to say, it’s quite infrequent that our initial analysis is dead set. 

Speculators, the mainstream and social media typically exaggerate and extrapolate into the indefinite, future short-term adverse developments. They can also discount long-term prospects and virtually always ignore regression to the mean. 

As a result, their “recency bias” occasionally reduces to attractive levels the prices of sound enterprises’ shares. During crises, the crowd panics – and, in rare instances — depresses the securities of sound companies to extremely low levels.

We currently possess and continue to accumulate a portfolio of resilient businesses whose securities, depressed by what we regard as significant but impermanent difficulties, we’ve acquired at sensible or even bargain prices. 

In short, over more than 2 decades we’ve regularly purchased from pessimists and occasionally sold to optimists.

The post 3 ASX shares the ‘Aussie Berkshire Hathaway’ loves the most right now appeared first on The Motley Fool Australia.

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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 Bruce Jackson.

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Fortescue Metals Group Limited (ASX: FMG) is one of the world’s biggest iron ore miners. However, the business has a relatively new segment called Fortescue Future Industries (FFI) which is planning a number of green hydrogen ideas.

What is Fortescue Future Industries (FFI)?

FFI is the division of Fortescue that is aiming to take a global leadership position in the renewable energy and green products industry by harnessing the world’s renewable energy resource to produce green electricity, green hydrogen, green ammonia and other green industrial products.

Fortescue is funding this by allocating approximately 10% of its net profit each year.

FFI’s FY22 expenditure is expected to be between US$400 million to US$600 million, including US$100 million to US$200 million of capital expenditure and US$300 million to US$400 million of operating expenditure.

There are a number of places that FFI is looking for international projects such as New Zealand, Papua New Guinea, the Democratic Republic of Congo, Indonesia, Latin America, Africa, Europe and North America.

Plans for hydrogen

FFI’s vision is to make renewable green hydrogen the most globally traded seaborne energy commodity in the world.

For starters, FFI is looking to help Fortescue become greener itself. Some of those plans include hydrogen.

A few months ago it said it had completed the design and construction of a hydrogen-powered haul truck for a technology demonstration, with systems testing underway. It also had completed the design and construction of a hydrogen-powered drill rig for technology demonstration, with systems testing underway.

Fortescue and FFI point to the US$12 trillion estimated global market for green hydrogen by 2050. There has been US$70 billion of public funding committed worldwide for hydrogen projects. There are more than 30 countries with hydrogen roadmaps. Fortescue believes that hydrogen can play a major role in passenger and heavy industry transportation.

FFI and Fortescue are looking to be able to offer customers green iron ore and enable green steel, facilitated by renewable energy and green hydrogen. It wants to be the first green iron ore provider in the world.

Latest project

A few weeks ago, FFI announced the construction of the world’s largest electrolyser, renewable industry and equipment manufacturing centre at Gladstone, Queensland.

This green energy manufacturing (GEM) centre will be the first in a series of centres that will “transform regional Australia through the manufacture of equipment that is critical to the generation of renewable energy and green hydrogen.”

Stage one of the six-stage project will establish Australia’s first multi-gigawatt-scale electrolyser factory, with an initial capacity of 2 gigawatts per annum, which is more than double current production globally. Construction of GEM will commence in February 2022, following final approvals, with the first electrolysers scheduled off the production line in early 2023.

FFI and Fortescue said that subject to customer demand, as orders firm for both electrolysers and associated green industry, the investment could be up to US$650 million. The initial electrolyser investment is expected to be US$83 million.

Detractors of green hydrogen

However, not everyone is convinced that green hydrogen is going to be the best idea.

Santos Ltd (ASX: STO) CEO Kevin Gallagher, according to reporting by media such as the Australian Financial Review, recently noted that green hydrogen is expected to be more expensive than other types of hydrogen. Mr Gallagher believes the focus needs to be on the carbon impact of hydrogen and its affordability, and thinks describing hydrogen by different colours as to how it’s made as an emotional one. According to the AFR, he also said:

The goal is to get rid of emissions, so it doesn’t matter at the end of the day whether you use natural gas or the sun to make zero emissions hydrogen, and you can call it whatever colour you like.

The post Is green hydrogen the future for Fortescue (ASX:FMG) shareholders? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Fortescue (ASX:FMG) share price higher but commodity boom at risk: economist
• 5 things to watch on the ASX 200 on Monday
• ASX 200 (ASX:XJO) midday update: BHP and Rio Tinto fall, Qantas higher
• Why the Fortescue (ASX:FMG) share price is falling again on Friday

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

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On Wednesday the S&P/ASX 200 Index (ASX: XJO) had a subdued day. The benchmark index finished the day marginally higher at 7,448.7 points.

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

ASX 200 expected to fall

The Australian share market looks set to fall on Thursday. According to the latest SPI futures, the ASX 200 is expected to open the day 12 points or 0.15% lower this morning. This follows a mixed night on Wall Street, which in late trade sees the Dow Jones down 0.5%, the S&P 500 down 0.25%, but the Nasdaq up 0.25%.

Oil prices tumble

Energy shares including Oil Search Ltd (ASX: OSH) and Woodside Petroleum Limited (ASX: WPL) could be under pressure today after oil prices tumbled overnight. According to Bloomberg, the WTI crude oil price is down 2.6% to US$82.42 a barrel and the Brent crude oil price has fallen 2.3% to US$84.41 a barrel. Traders were selling oil following a rise in US stockpiles.

ANZ full year results

The Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price will be one to watch when it releases its full year results this morning. According to a note out of Morgans, it is expecting the banking giant to report cash earnings from continuing operations of $6,017 million. This is broadly in line with consensus estimates. The broker has also pencilled in a 69 cents final dividend.

Gold price higher

Gold miners Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) could have a decent day after the gold price pushed higher. According to CNBC, the spot gold price is up 0.2% to US$1,797.2 an ounce. Softening bond yields boosted the price of the precious metal.

Fortescue Q1 update

The Fortescue Metals Group Limited (ASX: FMG) share price could be on the move today when it releases its first quarter update. The mining giant is likely to provide investors with an idea of just how badly the pullback in iron ore prices has impacted its margins.

The post 5 things to watch on the ASX 200 on Thursday 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. 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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So… it’s entirely possible I’m sharing this out of pure self-justification. Or to (try to) get the ATO to allow me to claim my favourite tipple as a tax deduction.

But I don’t think so.

See, I was sitting at my dining table at the end of last week, with a single malt whisky in front of me.

The drop in question was an Aberlour 14 year old, from Speyside.

(Truth be told, I’m not a connoisseur, but this one, I like!)

And I got to thinking: It takes a lot of guts, confidence, and optimism to distill a whisky, then essentially leave it alone for a decade and a half.

You have to really choose carefully, and craft thoughtfully.

Then… you have to do nothing. For a long time.

And it reminded me of investing.

You can’t make a 14 year old whisky by making 28, six-month old whiskies.

You can’t give in to impatience, and start again every 6 or 12 months.

You’ve gotta let time do its thing.

I have a very good sense that distillers would make good investors.

I’m less sure many investors (and most traders) would make good distillers.

Then again, whisky-makers have something that the modern age has stolen from investors — they can’t change the realities of aged whisky.

Unfortunately, for many investors, we can be as active as we want.

Usually to our detriment.

Here’s my challenge: Why not buy some shares tomorrow, and hold them for as long as your favourite whisky (or red wine) is aged.

And if you’re not an alcohol drinker, pretend you are — just this once — and choose a ‘virtual’ single malt. Make it a 12 year old. And plan to hold for that long.

Crazy?

I don’t think so.

The best investing returns have something important in common with the best whiskies.

Time.

Fool on!

The post Invest like a whisky maker appeared first on The Motley Fool Australia.

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The Gascoyne Resources Limited (ASX: GCY) share price has had a golden day, closing up 15.66% at 48 cents.

There’s a bit to cover here, so let’s get straight into it.

What’s led us to this point?

The gold miner’s shares were on the move on Wednesday amid a flurry of price-sensitive information over the past few days regarding Westgold Resources Ltd‘s (ASX: WGX) proposed off-market takeover.

Westgold originally made its intentions known to acquire Gascoyne in an unsolicited, conditional off-market takeover offer for all of the company’s outstanding shares.

The scrip offer was proposed at an exchange of 1 Westgold share for every 4 Gascoyne shares. The Gascoyne share price popped 21% on the day of the announcement.

To add another variable, Gascoyne and junior ASX minerals explorer Firefly Resources Ltd (ASX: FFR) agreed to merge operations way back in June.

Gascoyne has remained committed to the Firefly merger, making mention of it in each update on the Westgold proposal.

What makes things more challenging is that Wesgold’s offer, in effect, is contingent on the Firefly scheme not going ahead.

What happened next?

Around two weeks after Westgold first made its move, Gayscoyne’s board unanimously recommended its shareholders reject the offer.

The company’s major shareholder Deutsche Balaton AG1 – who holds 22% of Gayscone’s float – also recommended shareholders reject the proposal at the time.

Instead, Gascoyne unveiled its “enhanced business plan” where it reiterated its FY22 production forecast of 70-80koz on a substantially lower cost base.

Gascoyne then reiterated its recommendation to reject the Westgold offer on 18 October, advocating to “take no action in response to all correspondence from Westgold”.

But Westgold wasn’t done there. It submitted an application to the Australian government’s Takeovers Panel a couple of weeks ago.

It stated that “Gascoyne shareholders are being denied any opportunity to consider the Westgold Offer within a reasonable time period and with reasonable board recommendation and disclosure”.

It also revised its offer, increasing its scrip bid to 3 Westgold shares for every 11 Gascoyne shares, valuing the Gascoyne share price at 53 cents per share and the company at $133 million.

Of course, Gascoyne hit back

The company considered key aspects of the Westgold statement to be “misleading” and strenuously refuted statements that its updated business plan “escalates operational and financial risk to the company”.

Now Deutsche Balaton has chimed back in, explaining it does not support carrying out the scheme of arrangement with Firefly. It says it “does not believe that transaction is in the best interests of Gascoyne shareholders”, according to a release from the company on Monday.

In fact, Deutsche Balaton now considers the Westgold offer is superior to the Firefly scheme, as per a release out of Gascoyne’s camp today.

In the meantime, the Takeovers Panel also advised it has “decided not to make an interim order” in an announcement today.

Now, amid mounting pressures, Gascoyne admits that it “continues to review the Westgold offer and is taking advice from its legal and financial advisors” on the matter.

Its advisors are commissioned with examining the “ability of the Westgold offer conditions to be met, most notably the condition contained in section 7.2(a)” – the Firefly contingency.

Gascoyne again reiterated today that it recommends shareholders to take no action in relation to Westgold’s offer, at least until the review is complete.

Doubtless, there is more to come with this saga and the final decision will, ultimately, be left up to Gascoyne’s shareholders when the time arrives.

After exiting a trading halt, the Gascoyne share price finished the day 15.66% in the green. It closed the session at 48 cents apiece – a 3-month high for shareholders to enjoy.

The post Here’s why the Gascoyne Resources (ASX:GCY) share price is up 15% appeared first on The Motley Fool Australia.

More reading

• Gascoyne (ASX:GCY) share price slides 9% after board rejects takeover
• These were the best performing ASX 200 shares last week
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• Here’s why the Gascoyne (ASX:GCY) share price is rocketing 23% today

The author Zach Bristow 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.

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We have heard an awful lot about inflation over the past week – and indeed over the past few months. As the Australian economy recovers from COVID-induced lockdowns, increased spending and economic growth have raised the prospects of an inflationary surge. And higher inflation usually means higher interest rates.

This morning, the Australian Bureau of Statistics (ABS) released its latest inflation data covering the quarter ending 30 September. It found that prices across the economy rose by 0.8% over the quarter. That puts the running 12-month inflation rate at 3%. The ‘core’ rate of inflation (which takes out volatile, one-off rises in specific sectors) rose by 0.7% for the quarter, putting its 12-month figure at 2.1%.

Inflation pot comes off the backburner

The Reserve Bank of Australia (RBA) happens to have a ‘target band’ of between 2-3% for core inflation. This means that we are now within the RBA’s target band for the first time in years.

The biggest contributors to this higher inflation were fuel prices (petrol and diesel) and construction materials.

So now that inflation is within the RBA’s target band, what does this mean for interest rates? Well, the RBA has stated before that it will not lift rates from their current all-time low of 0.1% until inflation is “comfortably” within its target band.

RBA governor Philip Lowe has gone on to say that the RBA also wants wage growth across the economy to hit 3% before it considers raising rates. Several times this year, he and the RBA have said that they don’t expect these conditions to be met (read rates to rise) until 2024.

Well, that’s looking increasingly unrealistic, at least according to several commentators. According to reporting in the Australian Financial Review (AFR) today, AMP Ltd (ASX: AMP) chief economist Shane Oliver is “pencilling in” the first hike in interest rates in November next year. This, he predicts, will be followed by another hike in December 2022. That would bring the cash rate back up to 0.5%, five times what it is today.

Here’s some of what he told the AFR:

The September quarter inflation data is stronger than the Reserve Bank was forecasting in August. While the RBA won’t rush into a rate hike because it wants to see that ‘inflation is sustainably within the target range’… For this to occur it will want to see more evidence that the inflation pick-up is moving beyond transitory distortions due to the pandemic.

What would higher rates mean for ASX shares?

So what would this mean for ASX shares? Many investors are anxious about the prospects of rising rates, given how much the current near-zero level has contributed to both the ASX share market and the national property market’s recent rises. And perhaps fair enough too.

The great investor Warren Buffett once described interest rates as acting like gravity on financial markets – the higher the rates, the more they pull asset pricing back to Earth.

So are these fears justified? Not entirely, according to Mr Oliver. Oliver told the AFR that “although the first rate increases will mean a rise in consumer and housing interest rates, the overall level of the cash rate will still be incredibly low and far from ‘tight’ monetary conditions”.

The post What could it mean for ASX investors if interest rates rise in 2022? appeared first on The Motley Fool Australia.

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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 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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Commonwealth Bank of Australia (ASX: CBA) shares have rebounded from a small loss earlier in the day. CBA shares closed up 0.95% at $106.10 per share.

The S&P/ASX 200 Index (ASX: XJO), meanwhile, tracked the other way, giving back early day gains to close almost flat (up 0.07%).

That’s today’s price action.

Now here’s the latest on the big bank’s green initiatives.

Australia’s first build-to-rent green loan

According to a release from CommBank, it’s just signed Australia’s first build-to-rent green loan together with Oxford Properties Group.

The $130 million green loan will support the construction of Oxford’s Indi Sydney City development. The high rise will be the capital city’s first build-to-rent development and count among Australia’s most sustainable towers.

Among the innovative design features intended to make the building carbon neutral are regenerative lifts. These will channel the heat generated by elevators into reusable energy, offering a 20% to 25% increase in elevator energy efficiency.

Commenting on the green development loan, CBA’s group executive of institutional banking and markets, Andrew Hinchliff, said:

As our nation grows and evolves, the way Australians live, work and play is changing and people will be seeking new, more flexible modes of living that can put them closer to their jobs. Build-to-rent properties will play a key part in Australia’s future, and we’re very proud to have been able to help Oxford break new ground with this sustainable development.

CBA’s managing director, future cities and networks, Michael Thorpe, added:

We’re excited to bring the first premium built-to-rent offering to the Sydney residential rental market, and one that’s earned Green Loan certification through its strong sustainability credentials and a commitment to drive positive environmental outcomes.

How have CBA shares been performing?

CBA shares have gained 29% so far in 2021, easily outpacing the 13% year-to-date gains posted by the ASX 200.

Over the last month, the CBA share price is up 4.33%.

The post Own CBA shares? Here’s the bank’s latest green initiative 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 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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