The CBA share price jumped 13% higher today

The Commonwealth Bank of Australia (ASX:CBA) share price jumped a whopping 13% higher on Tuesday. Here's what you need to know…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It's not very often you can say that the Commonwealth Bank of Australia (ASX: CBA) share price jumped 13% higher.

But these are strange times and that is precisely what happened during trade on Tuesday. Australia's largest bank finished the day with an enormous 13.3% gain to $67.64.

But it wasn't just Commonwealth Bank charging higher. The rest of the big four banks got in on the action as well.

Also climbing very strongly was the Australia and New Zealand Banking Group (ASX: ANZ) share price, which finished the day with a 12% gain to $18.40.

The National Australia Bank Ltd (ASX: NAB) share price and the Westpac Banking Corp (ASX: WBC) share price were the laggards in the group with gains of approximately 7% and 8%, respectively.

Combined, they played a key role in the S&P/ASX 200 Index (ASX: XJO) storming a remarkable 5.8% higher to 5,293.4 points. This was its best daily performance in over two decades.

Why did CBA and the big four banks surge higher?

With no major news coming out of the banks today, it appears as though bargain hunters have been snapping up the big four after sharp pullbacks in their respective share prices.

Even after today's stellar gains, the banks are still down materially over the last 30 days.

For example, since this time last month, the ANZ share price is down 30.8%, the CBA share price is down 25%, the NAB share price has fallen 36.1%, and the Westpac share price is down 32.3%.

These declines have been driven by concerns over the banks' net interest margins following cash rate cuts and the impact that the coronavirus outbreak could have on bad debts in Australia.

However, whilst I suspect dividend cuts may be coming, I believe the extent of the selling has been severely overdone. In light of this, I can't say I'm surprised to see the banks rebound strongly today.

And based on current valuations and forecast dividend yields, I'm optimistic there will be further gains in the weeks ahead.

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Oil industry worker climbing up metal construction and smiling.
Energy Shares

ASX 200 energy shares lead the market as US trade deals fuel optimism

ASX energy shares lifted 3.94% as more US trade deals led to improved market sentiment.

Read more »

A female ASX investor looks through a magnifying glass that enlarges her eye and holds her hand to her face with her mouth open as if looking at something of great interest or surprise.
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

A smiling businessman in the city looks at his phone and punches the air in celebration of good news.
Broker Notes

These ASX 200 shares could rise 50% to 60%

Brokers believe these shares could deliver big returns for investors.

Read more »

A girl is handed an oversized ice cream cone with lots of different flavours.
Best Shares

8 ASX All Ords shares that tripled in value in FY25

Just 8 out of the 500 companies making up the ASX All Ords achieved share price growth of 200% or…

Read more »

Broker written in white with a man drawing a yellow underline.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

Woman with a scared look has hands on her face.
Broker Notes

Bapcor shares fell more than 30% yesterday. Should investors buy in the dip?

Is this a value opportunity?

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Broker Notes

Broker raises price targets on 2 ASX 200 shares to buy

Ord Minnett has just upped its 12-month share price targets on 2 buy-rated ASX 200 stocks.

Read more »

Man with rocket wings which have flames coming out of them.
Share Gainers

Guess which ASX All Ords stock just rocketed 34% on strong earnings growth

Investors just sent this ASX All Ords stock surging 34%. Here’s what’s happening.

Read more »