Insights

Why did the BHP share price slump 6% in July when the ASX 200 leapt higher?

Australia’s biggest company didn’t have a fantastic July.
The post Why did the BHP share price slump 6% in July when the ASX 200 leapt higher? appeared first on The Motley Fool Australia. –

The BHP Group Ltd (ASX: BHP) share price didn’t perform particularly well during July 2022. In fact, it fell by more than 6%. That’s in contrast to the S&P/ASX 200 Index (ASX: XJO) which rose by 5.7%.

The combination of those two numbers means that the underperformance was more than 10%.

But there are two different questions to answer here.

Why did the BHP share price fall and why did the ASX 200 rise?

The rise of the ASX 200

I’m not going to look at every single business in the ASX 200, but there was one particular group of businesses that had a pretty strong month – the big ASX bank shares.

By that, we’re talking about Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group Ltd (ASX: ANZ), and Macquarie Group Ltd (ASX: MQG).

June was a bit rough for those businesses as investors weighed up interest rate rises from the Reserve Bank of Australia (RBA) and what this might mean for their bank loan books and bad debt levels.

But, July was a month of recovery for the big banks.

Over the month:

The CBA share price went up by 11.5%.

The NAB share price rose by 11.7%.

The Westpac share price increased by 10.3%.

The ANZ share price went up by 4.75%.

The Macquarie share price went up by 10.1%.

So, while these five businesses aren’t the entire ASX 200, they had an important impact on the overall return of the ASX 200.

Why did the BHP share price fall?

Commodity businesses typically follow the performance of their respective resources in the shorter term.

Iron ore is the biggest profit generator for BHP, but other commodities can also have an impact as well. BHP also generates revenue from copper, nickel, and so on.

Commodity prices have been weakening amid growing concerns about a global economic slowdown due to rising interest rates and inflation.

There has also been concern about China Mineral Resources Group.

As reported by the ABC in July, China has formed an entity that “aims to give Chinese steel producers more bargaining power” over prices for Australia’s most important export, iron ore.

BHP chief financial officer David Lamont spoke about whether this new group could lead to lower iron ore prices (as reported by the ABC):

History would say no. We’re not worried about that, it’s something that’s been talked about for a period of time. At the end of the day, we believe markets will sort out where the prices need to be, based on supply and demand.

Time will tell how much effect this new entity has on BHP and the iron ore price.

The post Why did the BHP share price slump 6% in July when the ASX 200 leapt higher? appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.* Scott just revealed what he believes could be the “five best ASX stocks” for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now

See The 5 Stocks
*Returns as of July 7 2022

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

Why is the Fortescue share price sliding on Tuesday?
Experts name 2 ASX 200 dividend giants to buy
Why is the BHP share price gaining ground today?
Top broker issues new warning on outlook for iron ore price
Why did the BHP share price have such a cracking session today?

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited and Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

  • This field is for validation purposes and should be left unchanged.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Rebate Rewards

Level 2 Rebate

Deposit $2,000 and get $200 Rebate
$ 200 Rebate
  • 3 Simple Steps
  • 1. Register Using The Link Below (Promo-Code: WEBREBATE)
  • 2. Deposit $2,000 and place one trade at any non-Austalian market within 30 calendar days
  • 3. Receive Your $200 Rebate
Popular

Level 1 Rebate

Deposit $1,000 and get $100 Rebate
$ 100 Rebate
  • 3 Simple Steps
  • 1. Register Using The Link Below (Promo-Code: WEBREBATE)
  • 2. Deposit $1,000 and place one trade at any non-Austalian market within 30 calendar days
  • 3. Receive Your $100 Rebate

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex Securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

EASY QUALIFICATION & LOW ENTRY
NEW CLIENT REBATE OFFER
EARN UP TO $200 CASH REBATE
Act Fast - Promotion Ends In
Click Here To Get Started
EASY QUALIFICATION & LOW ENTRY
NEW CLIENT REBATE OFFER
EARN UP TO $200 CASH REBATE
Act Fast - Promotion Ends In
Click Here For More Info