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S&P/ASX 200 Index (ASX: XJO) lithium stocks are shrugging off some potentially concerning news about the outlook for the battery-critical metal. At least for now.

We’ll get to that news in a tick.

First, here’s how the top five lithium shares are performing in afternoon trade today:

• Pilbara Minerals Ltd (ASX: PLS) shares are up 2.4%
• Core Lithium Ltd (ASX: CXO) shares are up 2.7%
• Allkem Ltd (ASX: AKE) shares are up 5.2%
• IGO Ltd (ASX: IGO) shares are up 2.8%
• Mineral Resources Ltd (ASX: MIN) shares are up 3.49%

Looks like greed is trumping fear for investors in ASX 200 lithium stocks today.

But should they be concerned?

Why this 6% decline in China matters for ASX 200 lithium stocks

China produces approximately 75% of the world’s lithium-ion batteries each year.

And the Middle Kingdom boasts by far the largest production and sales figures for EVs of any nation on Earth.

In December alone, the China Automobile Association reported China produced 795,000 EVs. And the nation’s dealers dipped into their inventories, with a whopping 814,000 EVs sold.

The story was much the same throughout 2022. And this surge in demand helped drive lithium prices to all-time highs last year. Since that peak, prices have retraced some 30%. But many analysts are forecasting they could have further to fall.

The decline is partly demand related.

As Reuters reports, January saw a 6.3% decline in sales of EVs and plug-in hybrids in China. That’s after the sector grew 90% in 2022.

Commenting on the potential impact, Barrenjoey analysts said, “While we remain positive on the long-term outlook for lithium, the short-term outlook is less clear, with a clear acceleration in China EV sales needed to allay market fears.”

January’s decline is likely linked to the government’s plan to end subsidies for EVs. But it’s fuelling concerns that demand growth may slow just as supply growth looks set to explode.

Too much lithium?

ASX 200 lithium stocks could come under pressure more from a potential excess supply hitting the markets than from any big fall in demand.

And some analysts are forecasting this will see prices for the battery-critical metal continue to fall.

Chinese spot prices for lithium carbonate have dropped from some 600,000 yuan ($128,000) per tonne at the November peak to around 400,000 yuan ($86,000) today.

Commenting on market dynamics, vice president at Rystad Energy Susan Zou said (as quoted by Reuters):

Demand is still healthy, but battery and EV makers are currently destocking instead of placing new orders. The subdued spot demand therefore is weighing on sentiment and pressing down prices..

A lithium carbonate price of 200,000-300,000 yuan per tonne is where both upstream and downstream will feel comfortable.

“Supply is coming on stream faster than you can say ‘boo’,” Ord Minnett analyst Dylan Kelly added. “Demand remains strong, but prices have been unsustainable for some time now.”

Indeed, many lithium miners are not yet at the production stage. As they do begin producing, global supplies will ramp up.

Even among the ASX 200 lithium stocks, only Allkem, Mineral Resources, and Pilbara Minerals are currently producing.

Core Lithium looks to be next in line. Maiden spodumene concentrate production from its Finniss Lithium Project is expected to commence in the first half of 2023.

The post Investing in ASX 200 lithium stocks? Here’s why this 6% decline in China matters appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Why Allkem, Argosy Minerals, Mayne Pharma, and NextDC shares are racing higher
• Why did the Pilbara Minerals share price sink 9% in February?
• Own ASX lithium shares? Here is the latest Goldman Sachs lithium price forecast
• Broker says buy ASX 200 lithium share Allkem for 34% upside

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

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The February earnings season saw plenty of ups and downs, as well as some insider buying among these S&P/ASX 200 Index (ASX: XJO) shares.

They’ve each seen directors trading in their company’s stocks over the last week.

So, which ASX 200 directors were buying, and how much were they snapping up? Let’s take a look.

6 ASX 200 directors buying their company shares

Insider buying is often taken as a sign those working behind the scenes at an ASX 200 company are bullish on its share price’s future.

Thus, a barrage of director trades in Dexus Property Group (ASX: DXS) stock might have pricked the ears of market watchers. Particularly the $216,794 trade made by director Paula Dwyer, who snapped up 25,000 shares last Wednesday.

And Dwyer’s wasn’t the only insider to buy. Directors Elana Rubin and Rhoda Phillippo forked out $50,052 and $21,357 respectively for parcels of 5,813 shares and 2,500 shares over the course of the week.

AGL Energy Limited (ASX: AGL) has also seen recent insider buying, with director John Pollaers buying 10,000 shares for around $6.92 apiece.

Over at ASX 200 financials giant AMP Ltd (ASX: AMP), director Michael Sammells was on a share-buying spree. He snapped up 50,000 stocks in the company for around $1.09 apiece – sneaking in before it traded ex-dividend.

Meanwhile, Ansell Limited (ASX: ANN) director Debra Goodin bought 486 shares in the personal protective equipment manufacturer for a total of $12,959.34.

Director of hauling company Aurizon Holdings Limited (ASX: AZJ), Lyell Strambi, also got in on the insider buying action over the last week. He bought 5,952 shares for $3.36 each – a total of approximately $20,000.

And finally, Bendigo and Adelaide Bank Ltd (ASX: BEN) director David Foster bought 1,021 shares in the regional bank for $9.79 apiece – forking out $9,996 for the additional parcel.

The post 6 ASX 200 directors buying up their company shares in the past week appeared first on The Motley Fool Australia.

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More reading

• AMP shares drop then pop amid ex-dividend and delay of $225 million sale
• Why is the AMP share price sinking today?
• These ASX 200 shares were crushed in February
• Hoping to bag the newly reinstated AMP dividend? Read this
• I’d invest $5,000 into these excellent ASX shares for the long term

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 positions in and has recommended Bendigo And Adelaide Bank. The Motley Fool Australia has recommended Ansell and Aurizon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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

Harvey Norman Holdings Limited (ASX: HVN)

According to a note out of Goldman Sachs, its analysts have retained their buy rating on this retail giant’s shares with a trimmed price target of $4.70. Although disappointed with the company’s first-half performance, Goldman believes the half represents the peak cash drag on franchisee support and sees a lot of value in its property. The broker also notes that ex-property, its shares are trading at just 6x FY 2024 estimated earnings. This compares to 14.5x earnings for its arch-rival. The Harvey Norman share price is trading at $3.78 this afternoon.

NextDC Ltd (ASX: NXT)

A note out of Morgans reveals that its analysts have retained their add rating on this data centre operator’s shares with a reduced price target of $13.00. Morgans notes that NextDC delivered earnings slightly ahead of its expectations during the first half. The broker also highlights that management is expecting some material contract wins in the second half. The NextDC share price is fetching $10.55 on Wednesday.

Tyro Payments Ltd (ASX: TYR)

Another note out of Morgans revealed that its analysts have retained their add rating on this payments company’s shares with an improved price target of $1.89. It was pleased with Tyro’s performance in the first half. And based on its decent start to the second half, the broker expects the company to achieve its guidance in FY 2023. It also isn’t ruling out another takeover approach this year, which it suspects would drive its shares beyond its price target. The Tyro share price is trading at $1.59 today.

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

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More reading

• Why Allkem, Argosy Minerals, Mayne Pharma, and NextDC shares are racing higher
• Buying opportunity? Harvey Norman boss says share slump is a ‘total overreaction’
• 5 things to watch on the ASX 200 on Wednesday
• Why Accent, Adbri, Harvey Norman, and Pointsbet shares are sinking
• 3 ASX 200 shares making big moves on earnings announcements

Motley Fool contributor James Mickleboro has positions in Nextdc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Harvey Norman and Tyro Payments. The Motley Fool Australia has positions in and has recommended Harvey Norman. The Motley Fool Australia has recommended Tyro Payments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) has shaken off some morning blues so far this Wednesday to push higher this afternoon. After falling as much as 0.5% this morning, the ASX 200 is back in the green at the time of writing and is up a tentative 0.07% at just over 7,260 points.

Happy days! But time now to delve a little deeper into the ASX 200’s rather indecisive day of trading thus far, by checking out the stocks that are topping the ASX 200’s share trading volume charts right now, according to investing.com.

The 3 most traded ASX 200 shares by volume this Wednesday

Sayona Mining Ltd (ASX: SYA)

First up this Wednesday is the ASX 200 lithium stock Sayona Mining. This session has seen a sizeable 12.62 million Sayona shares swapped as it currently stands. There hasn’t been any price-sensitive news out of Sayona so far today.

However, this lithium share has still shot up by a pleasing 2.98% thus far to 24 cents a share. Most lithium shares are enjoying some big gains this Wednesday, despite no major news coming out of the sector. It’s this gain that probably explains the high volumes we are seeing here.

Telstra Group Ltd (ASX: TLS)

Next up is ASX 200 telco Telstra. So far this trading day, a decent 13.42 million Telstra shares have been dialled in for trading. There’s been no news out from Telstra itself either. But the company has just traded ex-dividend this morning for its upcoming interim dividend payment.

As a consequence, the Telstra share price has shed a chunky 2.3% or so at this point of the session. This is probably the source of Telstra’s high elevated trading volumes. Investors can now look forward to receiving Telstra’s 8.5 cents per share dividend on 31 March later this month.

Pilbara Minerals Ltd (ASX: PLS)

Finally this Wednesday, let’s look at Sayona’s fellow ASX 200 lithium share Pilbara Minerals. Today’s trading has seen a hefty 29.25 million PIlbara shares bought and sold thus far.

All has been quiet on the Pilbara news front as well. So it’s likely we are seeing a similar situation to that of Sayona Mining here. In Pilbara’s case, investors are enjoying even higher gains so far, with the Pilbara share price up a robust 4.20% at $4.34 a share right now.

Such a big share price lift has almost certainly caused the high share volume on display here.

The post Here are the 3 most heavily traded ASX 200 shares on Wednesday appeared first on The Motley Fool Australia.

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More reading

• Why Brainchip, Cooper Energy, Link, and Telstra shares are dropping today
• ASX 200 leaps higher on latest GDP and inflation news
• Why did the Pilbara Minerals share price sink 9% in February?
• Why is the Telstra share price sliding lower on Wednesday?
• These ASX 200 shares were crushed in February

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

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BHP Group Ltd (ASX: BHP) shares are trading higher on Wednesday.

In afternoon trade, the mining giant’s shares are up 2.5% to $46.39.

Investors have been piling into the resources sector today following the release of strong economic data out of China.

According to CNBC, China’s official manufacturing PMI hit 52.6 in February, which is above the 50-point mark that separates growth from contraction. Importantly, it is also the highest reading since April 2012, when the manufacturing PMI hit 53.5.

Should you buy BHP shares at $46?

In light of the above, investors may be wondering if BHP shares are good value at $46.00.

Unfortunately, opinion remains divided on the mining giant at the current level.

Goldman Sachs, for example, sees modest upside for the Big Australian’s shares and has a neutral rating and $48.00 price target. It commented:

BHP is currently trading at ~6x NTM EBITDA vs. global peers (including RIO, GLEN & AAL) at ~5x EBITDA, and at ~1.1x NAV vs. RIO at ~0.9x NAV. Although we believe this premium vs. peers can be partly maintained due to ongoing superior margins and operating performance (particularly in Pilbara iron ore), high returning copper growth, and lower iron ore replacement & decarbonisation capex, we highlight potential downside to our PT of A$48.0/sh.

However, over at Macquarie, its analysts are far more positive and see plenty of value in the BHP share price.

Last week, the broker put an outperform rating and $52.00 price target on its shares. This implies potential upside of 12% over the next 12 months.

In addition, the broker is expecting a ~$2.66 per share fully franked dividend in FY 2023. This equates to a 5.7% dividend yield, which stretches the total potential return to almost 18%.

Time will tell which broker makes the right call.

The post Should I buy BHP shares at $46? appeared first on The Motley Fool Australia.

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More reading

• Why did the BHP share price tumble 9% in February?
• Own BHP shares? Here’s how the ASX 200 miner is cutting emissions
• Why are ASX 200 mining shares ending the week in the red?
• Brokers name 3 ASX shares to buy now
• Could this send the BHP share price rocketing to all-time highs?

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 Scott Phillips.

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Most of us want a second income or side hustle. It’s certainly a little unsettling to rely on one primary course of income when you think about it. Although it’s good practice to build up a rainy day fund of savings, the threat of losing one’s job is something that most of us would still find (understandably) terrifying regardless.

But having a source of secondary, passive income would certainly help allay much of those fears.

However, just saying that you want a second source of passive income is the easy part. Finding a viable side hustle is the hard ask.

Do you start a business out of your garage? Or perhaps doing a podcast or starting a YouTube channel is the way to go? Then there’s always that fan favourite of drop shipping to consider…

But the side hustle that perhaps requires the least effort is right in front of us: investing in ASX dividend shares.

How can shares give you passive income?

ASX dividend shares are just as viable as a side source of passive income as anything else. And dividend shares pay out income by their very nature. Most investors enjoy a paycheque from their dividend shares every six months, and sometimes even more frequently.

And the secondary income you can receive from dividend shares is truly passive: you will get paid if you own the shares. There’s no further qualification needed. You can be sick or healthy, old or young, working or not working.

Now you might think that picking and choosing the right quality dividend shares that pay you income is hard work.

To a certain extent, this is true. No one wants a lemon in the form of the dreaded dividend trap: a company that seemingly offers a high dividend yield, only to cut it down the road.

So building your own share portfolio consisting of individual, dividend-paying companies can require a lot of effort, education and dedication. Some people love this hustle though, so this might be a perfect way to build up a high-performance source of secondary income.

For those who truly want a passive income, there is a path open for them as well. It’s investing in an ASX index fund.

An index fund tracks a broad swathe of a country’s share market. Such a fund, for example, will hold everything from Commonwealth Bank of Australia (ASX: CBA) and Woolworths Group Ltd (ASX: WOW) to JB Hi-Fi Limited (ASX: JBH) and Block Inc (ASX: SQ2) here in Australia.

The easiest side hustle out there?

The best thing about an index fund is that it does all the work for you. To illustrate, most ASX index funds tack the S&P/ASX 200 Index (ASX: XJO). The ASX 200 Index has a mandate to only hold the largest 200 companies listed on our share market.

If a company does well over time, its value will increase, and have a heavier presence in the index, meaning that our index fund will buy more of its shares over time. Conversely, if a company does poorly and loses value over time, it will be progressively weeded out of the fund.

The ASX 200 is rebalanced every three months or so, so this process is always happening in the background. And you as the index fund investor only have to leave it in the bottom drawer and collect the dividend distributions that your fund will pay out.

Yes, index funds usually pay dividends, simply because they hold so many dividend shares within them. If the said fund holds CBA and Woolworths shares, you will be passed on any dividends the funds receive from these companies.

ASX 200 index funds typically offer dividend distribution yields of anywhere between 3% and 8%, plus some franking credits too.

So in this way creating a side hustle by investing in dividend shares is a great way anyone can start a secondary source of passive income.

It might not make you as much money upfront as starting a wildly successful business or podcast. But unlike these two other paths, the effort required can be as low as you’d like.

The post Want a second income? Here’s how to make ASX dividend shares your side hustle appeared first on The Motley Fool Australia.

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More reading

• Why Allkem, Argosy Minerals, Mayne Pharma, and NextDC shares are racing higher
• Has this ‘completely changed the landscape’ for the future of Fortescue shares?
• Why Brainchip, Cooper Energy, Link, and Telstra shares are dropping today
• ASX 200 leaps higher on latest GDP and inflation news
• Guess which ASX 300 share has rocketed 27% in 2 days since reporting

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 positions in and has recommended Block. The Motley Fool Australia has positions in and has recommended Block. The Motley Fool Australia has recommended Jb Hi-Fi. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) has bounced back from a poor start. In afternoon trade, the benchmark index is up 0.1% to 7,264.4 points.

Four ASX shares that are climbing more than most today are listed below. Here’s why they are starting the month strongly:

Allkem Ltd (ASX: AKE)

The Allkem share price is up 5% to $11.95. Investors have been buying this lithium miner’s shares amid a rebound in the industry. In addition, a note out of Goldman Sachs may have given its shares a boost. The broker has reiterated its buy rating with a $15.40 price target. This implies potential upside of 29% from current levels.

Argosy Minerals Limited (ASX: AGY)

The Argosy Minerals share price is up 3.5% to 72 cents. This morning, this lithium developer announced that it has made further progress at the Rincon Lithium Project in Argentina. Argosy revealed the commencement of lithium carbonate batch production works, where 5.1 tonnes of battery quality product has currently been produced.

Mayne Pharma Group Ltd (ASX: MYX)

The Mayne Pharma share price is up 21% to $4.02. This appears to have been driven by recent news that it has signed an agreement for the sale of its US generics business. Management expects the transaction to create a leaner organisation and free up working capital to focus on core areas of business growth/value drivers. Another positive is management’s belief that it is on course to return to profit.

NextDC Ltd (ASX: NXT)

The NextDC share price is up over 3% to $10.60. This follows the release of a number of bullish broker notes this morning in response to the data centre operator’s half-year results. Citi was pleased with the company’s performance, noting that “NextDC reported underlying EBITDA of $97.5 million, up +17% yoy, and +5%/6% ahead of CitiE/Visible Alpha consensus.” It has a buy rating and $12.60 price target on the company’s shares.

The post Why Allkem, Argosy Minerals, Mayne Pharma, and NextDC shares are racing higher appeared first on The Motley Fool Australia.

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More reading

• Guess which ASX 300 share has rocketed 27% in 2 days since reporting
• Own ASX lithium shares? Here is the latest Goldman Sachs lithium price forecast
• Broker says buy ASX 200 lithium share Allkem for 34% upside
• 5 things to watch on the ASX 200 on Wednesday
• Why ASX 200 lithium shares are eyeing this surprising new Chinese move

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

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Fortescue Metals Group Limited (ASX: FMG) shares are up 2.57% today to $21.95 apiece amid news that the miner’s green subsidiary is looking to expand its investments in the United States.

According to reporting in The Australian, Fortescue’s executive chair Andrew Forrest says the company has been encouraged to invest in the US instead of Australia.

This is because of incentives contained in the US Inflation Reduction Act (IRA) for green energy projects.

The IRA includes $US437 billion worth of subsidies for new energy projects.

Forrest made the comments at a conference in Sydney.

He said the head of Fortescue Future Industries (FFI), Mark Hutchison, has put forward three new “significant” proposals for green hydrogen investment in the US to the company’s board.

Hutchison is flying to the US today for meetings.

Forrest said the US Inflation Reduction Act had “completely changed the landscape” for FFI.

He said:

We are going to have to work hard to keep Australia competitive (with the US). I can see us going backwards.

Forrest has been a leader among Australian companies on climate change and renewable energy.

He has travelled the world putting together partnership deals with many governments and businesses.

Together, they will develop renewable energy, green hydrogen, and green ammonia projects through FFI.

As we reported previously, FFI worked with the US government, the White House, and Senator Joe Manchin to support the IRA.

Hutchinson described the bill’s passage as “game changing for the green hydrogen market globally and a brilliant outcome for FFI”.

He said green hydrogen will become a multi-trillion-dollar market and “our role is to ensure FFI remains at the forefront of this global movement, to move at a rapid pace to capture this new market …”.

He added that FFI is “acknowledged internationally already” as a leading developer of green hydrogen.

Fortescue shares are up by 7.65% in the year to date and up 24% over the past 12 months.

The post Has this ‘completely changed the landscape’ for the future of Fortescue shares? appeared first on The Motley Fool Australia.

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More reading

• Fortescue share price rebounds on possible China supply restrictions
• Why Appen, Downer, Fortescue, and Invocare shares are crashing today
• Why is the Fortescue share price sinking 8% today?
• Why are ASX 200 mining shares ending the week in the red?
• 7 ASX 200 shares with ex-dividend dates next week

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

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) has fought back from a soft start and is trading slightly higher. The benchmark index is currently up 0.1% to 7,268.1 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why these shares are starting the month in the red:

Brainchip Holdings Ltd (ASX: BRN)

The Brainchip share price is down almost 4% to 52 cents. Investors have been selling this semiconductor company’s shares since the release of its full-year results on Friday. Those results revealed that the billion-dollar company generated only US$250k of revenue during the second half of FY 2022.

Cooper Energy Ltd (ASX: COE)

The Cooper Energy share price is down 9% to 15 cents. This morning, analysts at Macquarie responded negatively to the energy producer’s half-year results. Its analysts note that Cooper Energy’s earnings fell well short of expectations. In response, the broker retained its neutral rating and cut its price target to 19 cents.

Link Administration Holdings Ltd (ASX: LNK)

The Link share price is down 4.5% to $2.19. The majority of this decline is attributable to the administration services company’s shares trading ex-dividend this morning for its latest dividend. Eligible Link shareholders can now look forward to receiving its 4.5 cents per share partially franked dividend on 11 April.

Telstra Group Ltd (ASX: TLS)

The Telstra share price is down 2.5% to $4.06. Once again, this has also been driven by the telco giant’s shares going ex-dividend this morning. Last month, Telstra released its half-year results and declared a fully franked 8.5 cents per share interim dividend. This will now be paid to eligible shareholders at the very end of the month on 31 March.

The post Why Brainchip, Cooper Energy, Link, and Telstra shares are dropping today appeared first on The Motley Fool Australia.

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More reading

• Why is the Telstra share price sliding lower on Wednesday?
• These ASX 200 shares smashed the market in February
• Top ASX shares to buy in March 2023
• Here are the top ten ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Tuesday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Link Administration. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) was down as much as 0.6% in morning trade today.

Then, at 11:30am AEDT, the Australian Bureau of Statistics (ABS) released the latest data on Australia’s gross domestic product (GDP) growth and the monthly consumer price index (CPI) indicator.

In the following minutes, the ASX 200 charged 0.5% higher.

At the time of writing, the benchmark index is up a fraction of a percent for the day.

Here’s what investors are mulling over.

ASX 200 lifts on easing inflation

First, the inflation print.

The ABS reported that the monthly CPI indicator increased by 7.4% in the year to January 2023.

Michelle Marquardt, ABS head of prices statistics, noted that this remains the second highest year on year increase since the ABS began reporting on the monthly CPI in September 2018 “signifying ongoing high inflation.”

However, investors’ spirits look to have been buoyed by the fact that inflation came in below expectations, and significantly lower than last month.

“This month’s annual increase of 7.4% is lower than the 8.4% rise for the year to December 2022,” Marquardt said.

Easing inflation could signal that the Reserve Bank of Australia (RBA) might not need to raise interest rates as much as the market has been pricing in. And the prospect of a less hawkish RBA looks to have given the ASX 200 a healthy boost.

As for the areas where inflation is running the hottest in the monthly January CPI indicator, recreation and culture increased 10.2%, housing was up 9.8%, and the price for food and non-alcoholic beverages increased 8.2%.

How about the GDP figures?

Then there was the latest data on the Aussie economy, which also looks to have offered some tailwinds for the ASX 200.

The ABS reported GDP increased by 0.5% for the December quarter, also falling short of expectations. GDP expanded by 2.7% through the year.

While the December quarter marked the fifth consecutive quarter of growth for the Aussie economy, the ABS noted that growth has slowed in each of the last two quarters.

This is a case of bad news potentially being good news for stocks. That’s because a slowing economy would also indicate the RBA’s rate increases are having an impact, meaning a potential easing of the central bank’s rapid tightening policies.

Of course, not all stocks stand to benefit from the report.

In a potential red flag for the medium-term outlook for ASX 200 consumer discretionary shares, the ABS noted that the household saving ratio decreased to 4.5% from 7.1% in the prior quarter.

The post ASX 200 leaps higher on latest GDP and inflation news appeared first on The Motley Fool Australia.

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More reading

• Why is the Telstra share price sliding lower on Wednesday?
• These ASX 200 shares were crushed in February
• These ASX 200 shares smashed the market in February
• 5 things to watch on the ASX 200 on Wednesday
• Here are the top ten ASX 200 shares today

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

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