Why is the Core Lithium share price cratering 8% today?

Core Lithium shares are falling fast. What's going on?

| More on:
Codan share price A dismayed kid dressed as a scientist stands with his back to a rocket crashed into the ground

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

Key points

  • The ASX 200 is having a rough Thursday
  • But Core Lithium shares are doing far worse than the broader market
  • So what's up with this lithium luminary?

It's been a brutal day for the Core Lithium Ltd (ASX: CXO) share price this Thursday. At the time of writing, Core Lithium shares have lost a painful 8.41%, falling from $1.16 at market close yesterday to the $1.067 a share that we currently see.

The S&P/ASX 200 Index (ASX: XJO) is also having a rough day. But it still looks peachy by comparison, 'only' down by 0.5% at present.

Core Lithium has still had an incredible year. Despite some major falls recently (including today's), Core Lithium shares remain up by more than 68% in 2022 thus far:

Created with Highcharts 11.4.3Core Lithium PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

But what's going on with Core Lithium that would prompt investors to send this ASX 200 lithium producer down by more than 8% today?

Well, it has nothing to do with anything out of the company itself. Core Lithium has made no ASX announcements since 5 December.

So it looks as though Core Lithium shares have taken the brunt of the pessimism that the markets are feeling today over the recent decision of the US Federal Reserve. As we covered this morning, the US Fed decided to hike American interest rates by 0.5% overnight to a target range of 4.25% to 4.5%.

What really seems to have rattled investors though is Fed chair Jay Powell's hawkish comments that, "It is our judgment today that we are not at a sufficiently restrictive policy stance yet. We will stay the course until the job is done".

Higher interest rates are not good for shares in general. But they are especially damaging to the prospects of companies that are priced on their future prospects. That arguably includes Core Lithium.

Bad news all around for lithium shares

Further, we got the news this morning that Core Lithium's fellow lithium share Pilbara Minerals Ltd (ASX: PLS) received softer-than-expected prices for its latest lithium auction. Not exactly inspiring stuff for the ASX lithium space.

Pilbara was also recently the subject of some tough love from an ASX broker. As my Fool colleague James covered this morning, ASX broker Morgans has just indicated that it thinks the Pilbara share price may be close to peaking.

So we see to have a perfect cocktail of negative news for lithium shares like Core Lithium today. Therefore it's perhaps no wonder that the Core Lithium share price has taken such a beating.

Motley Fool contributor Sebastian Bowen 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 Scott Phillips.

More on Materials Shares

smiling worker stands before power generator technology
Materials Shares

Fortescue shares jump 5% on record performance

This mining giant was in fine form during the quarter.

Read more »

A man casually dressed looks to the side in a pensive, thoughtful manner with one hand under his chin, holding a mobile phone in his hand while thinking about something.
Materials Shares

Should you buy Pilbara Minerals shares today?

Let's see if analysts think investors should be buying the lithium giant's shares.

Read more »

Image of young successful engineer, with blueprints, notepad and digital tablet, observing the project implementation on construction site and in mine.
Materials Shares

Expert says this ASX mining stock could rise almost 30%

Let's see which miner is being tipped as a buy for investors right now.

Read more »

a mine worker holds his phone in one hand and a tablet in the other as he stands in front of heavy machinery at a mine site.
Materials Shares

BHP shares charge higher on record copper and iron ore production

Let's see how the miner performed during the fourth quarter.

Read more »

A man stands with hands on hips surveying construction of three high-rise buildings.
Materials Shares

Building activity on the rise – will ASX materials shares benefit?

New data from the March quarter shows a sharp rise in building activity. 

Read more »

Man smiling at a laptop because of a rising share price.
Materials Shares

Macquarie predicts 11% upside for this ASX materials stock

Here's why the broker is positive on the stock.

Read more »

Miner and company person analysing results of a mining company.
Materials Shares

Rio Tinto share price falls on Q2 update

Let's see what the mining giant reported for the second quarter.

Read more »

a man in a hard hat and high visibility vest smiles as he stands in the foreground of heavy mining equipment on a mine site.
Materials Shares

Could these 3 ASX materials shares be set to double?

This broker has buy ratings and aggressive price targets for these holdings. 

Read more »