S&P/ASX 200 Index (ASX: XJO) lithium shares are getting hammered today.
The ASX 200 is down 0.4% in early afternoon trade, with materials shares broadly lagging, as witnessed by the 1.7% decline in the S&P/ASX 200 Materials Index (ASX: XMJ).
But the top ASX lithium stocks by market cap are all having a much worse time of it.
At the time of writing:
- Core Lithium Ltd (ASX: CXO) shares are down 14.2%
- Allkem Ltd (ASX: AKE) shares are down 12.9%
- Pilbara Minerals Ltd (ASX: PLS) shares are down 9.9%
- IGO Ltd (ASX: IGO) shares are down 6.5%
Ouch!
So, why are ASX 200 lithium shares feeling the pressure today?
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What's going on with ASX 200 lithium shares?
Part of the selling pressure comes following a weak performance on US markets yesterday (overnight Aussie time).
While the S&P 500 Index (SP: .INX) closed down 0.9%, major US lithium stocks, including Albemarle Corporation (NYSE: ALB) and Livent Corp (NYSE: LTHM), dropped significantly more.
But we suspect more of the selling action we're seeing with ASX 200 lithium shares today stems from a potential reversal in sentiment that was witnessed during Monday's trading. A day that saw Core Lithium shares leap 11.7% by the closing bell.
Though Pilbara Minerals is a notable exception here. Despite trading 4.3% higher earlier in the day on Monday, Pilbara closed down 1.5% yesterday.
As for Monday's more bullish sentiment, that appears to have been driven by news out of China that authorities are rolling back some of the stricter aspects of the nation's COVID-zero policies.
China, a voracious consumer of lithium for its booming electric vehicle markets, has seen its economic growth hampered by rolling lockdowns in an effort to stamp out the virus. Any move by the Middle Kingdom to reopen will likely spur greater demand for a range of resources, including lithium.
Today, however, investors may be rethinking the timeline on China's reopening. This comes amid reports of surging COVID cases. Data released overnight revealed that Sunday marked the fourth consecutive day with more than 10,000 new cases reported inside the nation.
That may test Chinese authorities' resolve to loosen restrictions. And it looks to be throwing up some headwinds for ASX 200 lithium shares today.
How have these top lithium stocks performed in 2022?
Despite today's falls, all the ASX 200 lithium shares named above are still well into the green this calendar year.
While the benchmark index itself is down 6% in 2022, the Allkem share price is up 27%, IGO shares have gained 29%, the Pilbara Minerals share price has leapt 35% higher, and the Core Lithium share price is up 154% year to date.
