How did the CBA (ASX:CBA) share price perform in July?

After an extraordinary run earlier this year, why is the CBA share price running out of steam?

| More on:
A woman walks slowly across a yellow pedestrian crossing while people around her walk so fast they are blurred.

Image source: Getty Images

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

There has been an incredible amount of momentum behind the Commonwealth Bank of Australia (ASX: CBA) share price this year, rallying 26.5% from $83.40 on 1 January to a record close of $105.50 by 17 June.

Ever since its record highs, the CBA share price has been grinding sideways. CBA shares have edged 0.21% lower in July.

Why the CBA share price is moving sideways

Sydney lockdowns weigh on economic recovery

The Reserve Bank of Australia (RBA) released its August monetary policy meeting minutes on Tuesday. The RBA flagged that the Australian economy was likely going to contract in the third quarter of 2021.

"The economic recovery in Australia has been stronger than was earlier expected. The recent outbreaks of the virus are, however, interrupting the recovery and GDP is expected to decline in the September quarter."

The slowdown in near-term growth and heightened uncertainty could be a factor weighing on sentiment for the CBA share price.

Despite the near-term concerns, the central bank remains positive that the economy will pick up from where it left off.

"The experience to date has been that once virus outbreaks are contained, the economy bounces back quickly. Prior to the current virus outbreaks, the Australian economy had considerable momentum and it is still expected to grow strongly again next year. "

Lending indicators fall in June

The Australian Bureau of Statistics (ABS) has revealed that new loan commitments in housing and personal segments fell in June.

ABS figures show that new loan commitments for housing fell 1.6% month on month to $32.05 billion.

This represents the first month-on-month decline in 2021. However, still a significant 82.7% higher compared to a year ago.

Similarly, personal fixed-term loans fell sharply, down 12.6% month on month to $1.74 billion, but 16.8% higher year on year.

In June, the CBA share price went full circle, rallying 5.15% from $100.72 to a record close of $105.50 on 17 June, before closing 0.84% lower at $99.87 at the end of the month.

Conflicting interest rate expectations

The CBA share price took a sharp 7.41% tumble between 17 and 21 June.

Headlining the sell-off was news that the US Federal Reserve expected to potentially increase interest rates by late 2023. This is instead of its previous forecast of at least 2024.

Back at home, Westpac Banking Corp (ASX: WBC) also lifted its interest rate expectations, pointing to a potential rate hike from the RBA by Q1 2023.

CBA share price snapshot

Despite the recent lack of traction, the CBA share price is still up an impressive 22.14% year to date.

A near-term catalyst for the company's shares could be its upcoming full year FY21 results on Wednesday 11 August.

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. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

See The 5 Stocks *Returns as of 9 January 2025

Motley Fool contributor Kerry Sun 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.

More on Bank Shares

red percentage sign with man looking up which represents high interest rates
Bank Shares

Here's when Westpac says the RBA could cut interest rates

Will interest rates be heading lower next month? Let's find out.

Read more »

Shot of a young businesswoman looking stressed out while working in an office.
Bank Shares

Why is the Westpac share price being hit so hard today?

The bank is currently the worst-performing member of the big four.

Read more »

A happy elderly woman smiles and cheers as she looks at good investment news on her laptop.
Bank Shares

Are superannuation funds propping up the CBA share price?

This expert might have cracked the CBA share price code.

Read more »

A young bank customer wearing a yellow jumper smiles as she checks her bank balance on her phone.
Bank Shares

$5,000 invested in CBA shares at the start of 2023 is now worth…

CBA's smashing returns might surprise you...

Read more »

A man in a suit smiles at the yellow piggy bank he holds in his hand.
Share Market News

Looking outside the big four? What's in store for the other ASX bank shares in 2025?

Shares in the big four banks went gangbusters in 2024, but what about the others?

Read more »

Businessman smiles with arms outstretched after receiving good news.
Bank Shares

Guess which ASX 200 bank stock delivered double CBA's share price gains in 2024?

Hint: It's wasn't a big four bank...

Read more »

A man in a business suit whose face isn't shown hands over two australian hundred dollar notes from a pile of notes in his other hand to an outstretched hand of another person.
Bank Shares

Is it time to cash in some profit on ASX 200 bank shares?

The S&P/ASX 200 Banks Index surged almost 30% compared to a 7.5% lift for the broader ASX 200 last year.

Read more »

Nervous customer in discussions at a bank.
Share Market News

Are CBA shares a great buy for dividends in 2025?

Can investors bank on big dividends this year?

Read more »