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The wind seems to have gone out of Redbubble Ltd (ASX: RBL) shares today despite no news being released by the company. At the time of writing, the Redbubble share price is trading at $3.14 – 8.19% lower than yesterday’s closing price.

Today’s fall leaves the Redbubble share price around 57% lower than its all-time high of $7.35, which it hit in January 2021.

So, what’s the online art-focused marketplace been up to lately? Let’s take a look.

Redbubble’s 2021

Investors are driving down the Redbubble share price on Thursday for no obvious reason, other than that the broader market is also having a fairly lacklustre day.

But looking back, the market has heard three pieces of price-sensitive news from Redbubble this year.

The first was the company’s half-year results, which were released in February. Despite showing growth across key metrics, the Redbubble share price fell on the results, closing the day 16% lower than its previous session.

In March, Redbubble replaced Coca-Cola Amatil Limited in the S&P/ASX 200 Index (ASX: XJO). Coco-Cola Amatil was delisted from the ASX following a takeover.

Finally, on 22 April, Redbubble released its third-quarter and year-to-date update. The company seemed to be performing well year to date. For the 9 months ended 31 March, Redbubble saw a gross transaction value of $576 million and marketplace revenue of $456 million. That’s 85% and 82%, respectively, higher than the previous corresponding period.

However, for the third quarter of the 2021 financial year, the margin between the company’s earnings before interest, tax, depreciation, and amortisation (EBITDA) and its marketplace revenue was only 2.2%.

As The Motley Fool reported at the time, this may have turned investors away. It definitely seemed to weigh on the Redbubble share price, which fell to close 23% on the day of the update.

Redbubble share price snapshot

This year has been a tough one on the ASX for Redbubble shares. Currently, they are 43% lower than they were at the start of the year. However, they have gained 129% since this time last year.

Based on the current Redbubble share price, the company has a market capitalisation of around $859 million, with approximately 275 million shares outstanding.  

The post The Redbubble (ASX:RBL) is deflating by 8% today appeared first on The Motley Fool Australia.

More reading

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• Why Redbubble (ASX:RBL) is a bargain buy now: analyst
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• 2 fast-growth ASX shares that are being sold off

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.

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Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares are enjoying some time in the green on Thursday. At the time of writing, the ANZ share price is trading 1.24% higher at $29.28. In earlier trade, the bank’s shares were up by almost 2.5% to reach a new, 52-week high of $29.64 shortly after midday.

ANZ’s big four stablemates are also having a positive day of trade following the release of some upbeat employment figures from the Australian Bureau of Statistics this morning.

In other news from ANZ, the bank announced today that the new trade deal between the United Kingdom (UK) and Australia will see new opportunities for the bank’s customers.

With ANZ shares enjoying their new 52-week high watermark, let’s take a closer look at what the bank had to say on the trade deal.

UK trade deal will benefit ANZ customers

ANZ has welcomed the free trade deal between Australia and the UK, which the two nations’ Prime Ministers agreed to on Tuesday.

The trade deal will see some tariffs lifted or reduced on products traded between the two countries.

According to ANZ, the reduced tariffs will help create opportunities for its Australian business customers.

ANZ group executive institutional Mark Whelan commented on how the deal might benefit the bank’s customers:

ANZ has been a trade bank since our inception… This trade agreement will create new opportunities for our customers by eliminating some of the barriers they face moving goods and capital to and from the UK.

He said removing tariffs will allow Australian exporters easier access to customers and markets in the UK. Particularly, in the tourism, agriculture, and professional services sectors.

ANZ head of UK & Europe Richard Dawson also said the UK is a “key market” to many of the bank’s customers.

The trade deal is the UK’s first bilateral agreement since it left the European Union earlier this year.

Currently, there is approximately $36.6 billion worth of trade between Australia and the UK. That figure is expected to increase due to the trade deal.

ANZ share price snapshot

ANZ shares have been performing well on the ASX so far this year.

Currently, the ANZ share price is around 29% higher than it was at the start of 2021. It has also gained almost 53% since this time last year.

The bank has a market capitalisation of around $83.3 billion and a price-to-earnings (P/E) ratio of around 16.7. It has approximately 2.8 billion shares outstanding.

The post ANZ (ASX:ANZ) shares hit 52-week high, trade deal to create ‘new opportunities’ appeared first on The Motley Fool Australia.

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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.

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The Appen Ltd (ASX: APX) share price has been on fire over the last 30 days.

Since this time last month, the artificial intelligence data services company’s shares have stormed 22% higher.

However, despite this impressive gain, the Appen share price is still down a whopping 47% since the start of the year.

Is the Appen share price still good value?

According to a recent note out of Bell Potter, its analysts believe the Appen share price may have peaked for the time being.

The note reveals that the broker has a hold rating and $13.50 price target on the company’s shares. This compares to the latest Appen share price of $13.55.

Bell Potter has a few concerns over its long term growth potential after recent updates and sees no short term catalysts that will drive a re-rating of its share price. Particularly given that its shares are already trading at 35x estimated FY 2021 earnings and 11x estimated FY 2022 EBITDA.

Is anyone more positive?

It is worth noting that there are at least a couple of brokers that are more positive on the Appen share price.

One of those is Ord Minnett. Late last month the broker put a buy rating and $24.75 price target on its shares. This price target implies potential upside of approximately 83% over the next 12 months.

Ord Minnett was pleased with Appen’s reorganisation plans and its earnings guidance confirmation for FY 2021.

In respect to its reorganisation, Appen is restructuring its business to align to its product-led growth strategy and distinct customer propositions. This will see the company operate with four customer-facing business units – Global, Enterprise, China, and Government. Management expects the changes will provide greater visibility of the drivers and performance of the business.

As for its guidance, Appen reiterated that it expects to achieve underlying EBITDA of US$83 million to US$90 million in FY 2021. This represents constant currency growth of 18% to 28% year on year.

Time will tell which broker makes the right call.

The post Up 22% in a month: Is the Appen (ASX:APX) share price heading even higher? appeared first on The Motley Fool Australia.

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• ASX 200 Weekly Wrap: ASX edges even higher, led by tech rebound

James Mickleboro does not own any shares mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Appen Ltd. The Motley Fool Australia owns shares of and has recommended Appen 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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Australia’s top brokers have been busy adjusting their estimates and recommendations once again. This has led to the release of a number of broker notes.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

NRW Holdings Limited (ASX: NWH)

According to a note out of Macquarie, its analysts have commenced coverage on this mining services company’s shares with an outperform rating and $2.10 price target. Macquarie likes NRW due to its exposure to rising spending on iron ore projects and infrastructure. It notes that it has an order book worth $14 billion which if converted should allow for strong ongoing revenue generation. The NRW share price is trading at $1.52 this afternoon.

Nuix Ltd (ASX: NXL)

A note out of Morgan Stanley reveals that its analysts have retained their overweight rating and $6.40 price target on this investigative analytics and intelligence software provider’s shares. Morgan Stanley notes that the company’s CEO and CFO are leaving and Nuix is in the process of finding a COO. While it sees risks from such major changes, it believes these steps are necessary to rebuild investor confidence. In light of this and its belief that the global forensic and investigative software market is a structural growth story, it maintains its overweight rating. The Nuix share price is fetching $2.78 today.

Praemium Ltd (ASX: PPS)

Analysts at Ord Minnett have retained their buy rating and increased their price target on this investment platform provider’s materially to $1.35. According to the note, the broker made the move after making changes to its valuation approach. In addition to this, the broker believes that Praemium could become a takeover target of one of its larger rivals. This is due to its quality technology platform and blue chip clients. The Praemium share price is trading at 97 cents this afternoon.

The post Brokers name 3 ASX shares to buy now appeared first on The Motley Fool Australia.

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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 Praemium Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Nuix Pty Ltd. The Motley Fool Australia has recommended Nuix Pty Ltd and Praemium 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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Worley Ltd (ASX: WOR) shares can’t catch a break today despite announcing two new contract awards.

At the time of writing, the Worley share price is down 2.77% to $11.57.

Worley secures renewable fuels contract

According to its first release, Worley advised it has been awarded a services contract with engineering company, Koch Project Solutions.

The deal will see Worley provide front-end engineering and design (FEED) services for a new renewable fuels plant in California. Once completed, the plant will be owned and operated by NASDAQ-listed company, Aemetis Inc (NASDAQ: AMTX).

The renewable jet and diesel project will combine low-carbon feedstocks with renewable hydrogen from orchard and forest wood waste to produce low-carbon fuels. It is estimated that at capacity, the plant will make 170 million litres per year of renewable jet and diesel fuel. This fuel can be used in aeroplanes, trucks and ships without requiring any engine modifications.

The project will be managed by Worley’s United States West offices. Furthermore, ongoing support will come from the company’s Global Integrated Delivery team in India.

It is expected that the FEED phase will be completed towards the backend of the calendar year.

Commenting on the contract win, Worley CEO Chris Ashton said:

We are pleased that Koch Project Solutions and Aemetis have selected Worley to deliver this significant project. The Carbon Zero 1 project aligns with our focus to support our customers on their energy transition, while remaining committed to our purpose of delivering a more sustainable world.

Worley wins second contract for the day

Adding to the positive release, Worley further announced it has won a services contract with Canadian company, Parkland Refining BC.

Under the contract, Worley will provide consulting, engineering, procurement, construction management and commissioning services to support works at Burnaby refinery. Worley noted that this is on top of the existing relationship of undertaking capital work at the facility.

The Burnaby refinery converts crude and synthetic oil into gasoline, diesel, jet fuels, asphalts, heating fuels, heavy fuel oils, butanes, and propane.

The term of the contract will last for a period of 5 years.

The services will be led by Worley’s Calgary office with support from its global consulting business, Advisian, delivering technical expertise. Worley’s gas treating and sulphur technology business, Comprimo will provide the technology and design.

Mr Ashton went on to further comment:

We are pleased to continue supporting Parkland at its Burnaby refinery. We will combine our long-term presence at the refinery over the last two decades with our technical expertise to deliver efficient and reliable operations, while remaining committed to delivering a more sustainable world.

Worley share price summary

Regardless of today’s fall, Worley shares are still up more than 25% from this time last year.

The company is ranked 84th in terms of the largest market capitalisation on the ASX, with $6 billion.

The post Worley (ASX:WOR) share price edges lower despite contract wins 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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It appears the investment management company’s investor day presentation hasn’t done the Challenger Ltd (ASX: CGF) share price any favours.

After closing yesterday at $5.65, the Challenger share price dipped by 5.31% to $5.35 in early morning trade. It has since rallied and, at the time of writing, shares are swapping hands at $5.49, down 2.9%.

Let’s take a look at what details were shared with investors this morning.

Why is the Challenger share price falling?

Investors have been selling out of the retirement-centric asset manager today following the release of its investor day presentation.

Challenger reaffirmed its FY21 guidance will be at the bottom end of its $390 million to $440 million range. This information had already been shared towards the end of April, sending the Challenger share price 20% lower in a week.

Management provided an update on its strategy and outlook following a period of disruption.

As a capital measure, Challenger has revised its targeted prescribed capital amount (PCA) from 1.45 times to 1.6 times. The increase in the risk setting will dampen the fund’s return on equity by roughly 2%.

As a result, the company also revised its pre-tax return on equity target to the Reserve Bank of Australia cash rate plus 12%, down from plus 14%.

Commenting on the change, Challenger CEO and managing director Richard Howes said:

Our strategy to grow sees us building further on our already strong retirement brand and customer franchise. It’s essential we protect this valuable asset to support our long-term growth and success. To this end, we are enhancing our risk settings, reflecting our commitment to maintain our strong capital position.

Fundamentally, this means the fund manager is reducing the risk exposure of its fund by keeping more cash up its sleeve. However, less risk means less potential reward for those retirees.

Looking to FY22

The company’s normalised net profit before tax guidance for FY22 has failed to put the Challenger share price in the green. An estimated range between $430 million to $480 million was provided by the fund manager.

Management believes the midpoint of $455 million represents their best estimate. The FY22 forecast represents a 17% increase compared to FY21.

Despite the positive estimate, Challenger’s share price is struggling to find its footing today. However, the company’s shares have rallied 11.68% in the past month.

Listed investment company, Wam Leaders Ltd (ASX: WLE) added the annuity business to its portfolio back in April.

The post Challenger (ASX:CGF) share price dips after revised capital measures appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler 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 Challenger 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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Airtasker Ltd (ASX: ART) shares have had a good run over the past 30 days, with plenty of news to spur them on.

The Airtasker share price is currently sitting 7.41% higher than it was this time last month.

On 17 May, Airtasker shares closed at $1.08. At the time of writing, the company’s shares are trading at $1.16.

Let’s take a look at what the outsourcing platform has been up to lately.

The month that’s been for Airtasker

Over the past month, the ASX has been updated on news from Airtasker four times.

The first was on 21 May, when Airtasker shares entered a trading halt as the company announced it will acquire San Francisco-based local services marketplace Zaarly.

Airtasker’s first overseas expansion will cost it around $3.4 million. Additionally, it plans to continue expanding into the United Kingdom in the future.

To fund the acquisition and its future growth plans, Airtasker conducted a $20.7 million capital raising.

On 25 May, the company officially ended its trading halt, announcing it had successfully completed the capital raise.

That day, Airtasker shares closed 12% higher than their previous session.

Then, on 7 June, the Airtasker share price gained another 5% without the company uttering a word.

The gain was likely due to a broker note out of Morgans. The broker upgraded the company from a neutral rating and improved its price target to $1.29.

Finally, on 11 June, Airtasker was officially admitted to the S&P/ASX All Technology Index (ASX: XTX) – though, the news didn’t affect its share price.

Airtasker share price snapshot

The Airtasker share price had had a productive first few months on the ASX. The company completed its initial public offering (IPO) on 23 March.

Airtasker shares have gained almost 15% since first hitting the ASX boards and are more than 78% higher than their IPO price of 65 cents.

The company has a market capitalisation of around $480 million, with approximately 413 million shares outstanding.

The post The Airtasker (ASX:ART) share price has gained 7% in a month appeared first on The Motley Fool Australia.

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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 recommended Airtasker Limited. 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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In early afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is out of form and trading lower. At the time of writing, the benchmark index is down 0.3% to 7,363.5 points.

Four ASX shares that are not letting that hold them back are listed below. Here’s why they are charging higher:

Bigtincan Holdings Ltd (ASX: BTH)

The Bigtincan share price has jumped 11% to $1.13. This morning the sales enablement platform provider announced a small acquisition and revealed that it is on track to surpass its annualised recurring revenue guidance in FY 2021. In respect to the former, Bigtincan is acquiring Vidinoti SA for ~$770,000. Vidinoti is a leader in augmented and virtual reality systems and has developed a comprehensive suite of tools to create, deploy, and manage augmented reality content.

Opthea Ltd (ASX: OPT)

The Opthea share price has surged 17% higher to $1.65. Investors have been buying this biotech company’s shares following an update from rival Clearside Biomedical. That update reveals that Clearside Biomedical’s Phase 1/2a trial of its wet age-related macular degeneration (wet AMD) candidate has been successful. This news appears to have brought Opthea onto the radar of investors because both companies are developing drugs that target wet AMD. However, Opthea is well ahead and undertaking a phase 3 trial at present.

Seven West Media Ltd (ASX: SWM)

The Seven West Media share price has rocketed 17% higher to 47.5 cents. This morning the media company revealed that trading conditions have been very strong during the fourth quarter of FY 2021. According to the release, management expects fourth quarter advertising revenue to increase by 45% over the prior corresponding period. Seven West Media also revealed that full year operating earnings are expected to come in ahead of analyst consensus estimates.

Telix Pharmaceuticals Ltd (ASX: TLX)

The Telix share price is up 3.5% to $5.82. This follows an update on its meeting with the U.S. Food and Drug Administration in relation to its new drug application review for its Illuccix product. Positively, the FDA indicated that there are no outstanding substantive review issues with Telix’s submission. As a result, management is preparing for a launch, pending final approval.

The post Why Bigtincan, Opthea, Seven West Media, & Telix shares are charging higher appeared first on The Motley Fool Australia.

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James Mickleboro owns shares of Telix. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended BIGTINCAN FPO. The Motley Fool Australia owns shares of and has recommended BIGTINCAN FPO. 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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Buy now, pay later (BNPL) player Zip Co Ltd (ASX: Z1P) has been on a wild rollercoaster ride this year.

Zip shares started 2021 in the mid $5s, then peaked as high as $13.92 in February. Since then the valuation has suffered like many of its growth cohorts. At the time of writing, the Zip share price is down 1.24%, trading at $7.16.

So is it an investment opportunity now? Is it effectively buying in at half-price?

Shaw and Partners analyst Jono Higgins reckons so.

“We’ve got a 12-month price target of $16 per share on the stock. So we think a potential catalyst on that would be good quarterlies, merchant announcements and the like,” he told the Direct From The Desk podcast.

“Particularly large and strategic merchant announcements, as well as just continued growth. The benefit of a business growing like this is that over time, as long as the growth dominates, the share price should look after itself.”

BNPL sector growth is ‘extraordinary’

While stiff competition is a risk for all buy now, pay later providers, the industry is still in a high-growth phase, according to Higgins.

“We think Zip will outperform on the back of a number of different dynamics, but the whole sector is performing very strongly and we’re seeing some exceptional growth rates,” he said.

“We’re seeing Zip adding 8,000 customers a day. We’re seeing Afterpay Ltd (ASX: APT) adding 15,000 customers a day. We’re seeing Klarna adding 20,000 customers a day. Sezzle Inc (ASX: SZL) adding 5,000. These growth rates are extraordinary and they seem to be increasing.”

Higgins reckons if a company can keep increasing its growth rate then the valuation will catch up very easily.

“Zip’s on something like 6 times forward sales into FY22. If they grow their sales at 100% the next year, then they’ll be on 3 times forward sales,” he said.

“If the market’s prepared [next year] to still pay 6 times forward sales, then the share price will effectively double over the next 12 months and that’s with no rewriting. That’s what’s attracting us to the sector.”

Excellent leadership

Higgins is a big fan of the people running Zip.

“I recall meeting management when they were doing a few hundred thousand dollars in sales and struggling to get finance out of venture capital firms in the US — and getting charged 15% to do it,” he said.

“I’m [now] looking at a management team that’s been dynamic and grown up to a $450, $500 million annualised sales run rate. [And they’ve] made an overseas acquisition, which has been incredibly successful and is now one of two major payment players that are worth in the billion dollars.”

The acquisition he refers to is the buyout of the American rival Quadpay.

“They still have Brad Lindenberg and Adam Ezra involved there who were the founders of [Quadpay],” Higgins said.

“They’ve got really strong management in the UK. They’ve been picking up people from PayPal Holdings Inc (NASDAQ: PYPL), Amazon.com Inc (NASDAQ: AMZN), Shopify Inc (NYSE: SHOP). I think they have really built the second tier of management to take this business to the wider stage.”

Watch out for buyouts and mergers

With so many different players in the industry, Higgins expects consolidation in the future.

“In the short term, I think you do want to be careful of the smaller players. Our view is to be careful with the smaller players because the larger players effectively have the capital to really go after them, and they can raise capital at very short notice and they can fight them in the checkout,” he said.

“So we think just keep to number one and two on the ASX. That’s Zip and Afterpay.”

The post Are Zip (ASX:Z1P) shares cheap enough to buy now? appeared first on The Motley Fool Australia.

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Tony Yoo holds shares in AFTERPAY T FPO, Amazon, and PayPal Holdings. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO, Amazon, PayPal Holdings, Shopify, and ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Sezzle Inc and has recommended the following options: long January 2022 $1,920 calls on Amazon, long January 2022 $75 calls on PayPal Holdings, long January 2023 $1,140 calls on Shopify, short January 2022 $1,940 calls on Amazon, and short January 2023 $1,160 calls on Shopify. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia has recommended Amazon, PayPal Holdings, and Sezzle Inc. 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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In 2021 so far, much of the discussion around the share market and investing in ASX shares have centred around inflation. Specifically, whether this economic scourge will rear its ugly head in the next year or two. February saw an intense reaction to this possibility, with many sectors that investors seemed to deem as highly exposed to future inflation, selling off sharply.

No sector was harder hit than ASX tech shares. Following a similar reaction over in the US, the S&P/ASX All Technology Index (ASX: XTX) fell a nasty 18% between 10 February and 9 March earlier this year. We can see this in action by looking at the Afterpay Ltd (ASX: APT) share price. Afterpay can be described as a ‘poster child’ of sorts when it comes to ASX tech shares. And boy, did it have a rough ride a few months ago. Between February and May, Afterpay shares fell almost 50% in value.

Inflation returns?

One of the factors that seem to be in play here was inflation fears. Financial markets typically respond to higher inflation expectations with an increase in the running yield government bonds are priced with.

In early 2021, a 10-Year US Treasury Note was priced with a yield of roughly 1%. By April, this had grown substantially to around 1.75% before sliding back over subsequent weeks to the ~1.45% we saw yesterday. But today, this yield has shot up again, back to 1.59% at the time of writing.

So what happened? The US Federal Reserve, that’s what.

According to a report in the Australian Financial Review (AFR) today, last night the Fed seemed to reign in its previous rhetoric surrounding inflation and its medium-term expectations on it. Previously, (as we’ve covered over the past few months), the Fed had strongly signalled that it expected that rates would not have to rise until 2023 or 2024, contingent on inflation running at 2% and the economy hitting something close to full employment.

But last night, the Fed seemed to change its tune somewhat. The AFR quotes US Fed chair Jerome Powell as stating the following:

Inflation has come in ahead of expectations in the last few months… Is there a risk that inflation could be higher than we think? Yes. There is a lot of uncertainty. We need to see how things evolve in coming months. This is an extraordinarily unusual time.

How have ASX shares reacted today?

This rather extraordinary statement came alongside some revised inflation expectations from the Fed. 3 months ago, the central bank was predicting US inflation of 2.4% for 2021. As of last night, the Fed now expects that number to hit 3.4%. That’s a pretty big revision over a 3 month period. The Fed has also revised its interest rate expectations, flagging the possibility of up to 2 rate hikes by 2023.

As you might expect, there has been a pretty substantial reaction to this update from financial markets. We’ve already covered the spike in US government bond yields. But we’ve also seen the US S&P 500 Index (INDEXSP: .INX) drop sharply last night in the news. It recovered slightly at the end of the day’s trading but still finished 0.54% lower.

The S&P/ASX 200 Index (ASX: XJO) is also dipping today and is down 0.47% to 7,351 points at the time of writing. The Aussie dollar has also been sold off. It was going for more than 77 US cents yesterday. Today, it has dropped to 76.24 US cents.

Markets tend to fear inflation mainly because of the higher interest rates that come with it. It might well have the potential to spoil the party the ASX 200 has been enjoying over June so far.

The post Did the US Federal Reserve just ring the inflation warning bell? 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. owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. 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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