The Macquarie share price is down 2.6% this week but up 4.6% over four weeks. Why has it started August in the red?
The post Why has the Macquarie share price had such a lacklustre start to August? appeared first on The Motley Fool Australia. –
The Macquarie Group Ltd (ASX: MQG) share price is down 2.6% this week but up 4.6% over the past month. So, why the lacklustre start to August?
Did the interest rate rise have an impact?
The S&P/ASX 200 Financials Index (ASX: XFJ) is up 0.66% over the past five days. The big news of the week was the Reserve Bank of Australia (RBA) lifting interest rates for a fourth consecutive month.
The RBA Board lifted the rate by 50 basis points. This was the third rise of this size in consecutive months to take the cash rate to 1.85%. On the day of the rate rise, the Macquarie share price lost 0.46%.
As my colleague Bernd reported this week, higher rates mean larger net interest margins (NIMs) for the banks. This means they can simply charge more interest on their variable loans.
But higher rates can also lead to more bad debts, along with fewer new mortgages as the property market cools.
Looking at the share price performance of the big four, we see a mixed bag of results alongside Macquarie this week.
Why has the Macquarie share price dipped this week?
Perhaps a broker note from Goldman Sachs last Friday has taken some wind out of Macquarie’s sails.
As my Fool colleague James reported, its analysts retained a neutral rating on Macquarie. They also trimmed their price target on Macquarie shares to $194.03.
This is despite them being pleased with Macquarieâs performance during the first quarter.
MQG 1Q23 performance was solid, which despite difficult conditions, was up on a strong pcp with annuity style businesses up significantly and capital markets facing businesses up slightly.
That said, management noted conditions did soften during the quarter and did update its divisional guidance, which implied broadly consistent Group NPAT to our previous forecasts.
While it believes Macquarie’s growth outlook is strong, Goldman expects the bank to report a decline in profits in FY23.
They say the Macquarie share price is at a premium to long-term averages, hence the neutral rating.
Morgans likes Macquarie because of its exposure to long-term structural growth areas. The broker also thinks Macquarie’s trading businesses are well-placed to profit in the current volatile markets.
We continue to like MQGâs exposure to long-term structural growth areas such as infrastructure and renewables. The company also stands to benefit from recent market volatility through its trading businesses, while the company continues to gain market share in Australian mortgages.
The Macquarie share price is down 16.5% in the year to date.
The post Why has the Macquarie share price had such a lacklustre start to August? appeared first on The Motley Fool Australia.
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JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Bronwyn Allen has positions in Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, Macquarie Group Limited, and Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs. 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.