The BHP Group Ltd (ASX: BHP) share price didn't perform particularly well during July 2022. In fact, it fell by more than 6%. That's in contrast to the S&P/ASX 200 Index (ASX: XJO) which rose by 5.7%.
The combination of those two numbers means that the underperformance was more than 10%.
But there are two different questions to answer here.
Why did the BHP share price fall and why did the ASX 200 rise?
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The rise of the ASX 200
I'm not going to look at every single business in the ASX 200, but there was one particular group of businesses that had a pretty strong month – the big ASX bank shares.
By that, we're talking about Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group Ltd (ASX: ANZ), and Macquarie Group Ltd (ASX: MQG).
June was a bit rough for those businesses as investors weighed up interest rate rises from the Reserve Bank of Australia (RBA) and what this might mean for their bank loan books and bad debt levels.
But, July was a month of recovery for the big banks.
Over the month:
The CBA share price went up by 11.5%.
The NAB share price rose by 11.7%.
The Westpac share price increased by 10.3%.
The ANZ share price went up by 4.75%.
The Macquarie share price went up by 10.1%.
So, while these five businesses aren't the entire ASX 200, they had an important impact on the overall return of the ASX 200.
Why did the BHP share price fall?
Commodity businesses typically follow the performance of their respective resources in the shorter term.
Iron ore is the biggest profit generator for BHP, but other commodities can also have an impact as well. BHP also generates revenue from copper, nickel, and so on.
Commodity prices have been weakening amid growing concerns about a global economic slowdown due to rising interest rates and inflation.
There has also been concern about China Mineral Resources Group.
As reported by the ABC in July, China has formed an entity that "aims to give Chinese steel producers more bargaining power" over prices for Australia's most important export, iron ore.
BHP chief financial officer David Lamont spoke about whether this new group could lead to lower iron ore prices (as reported by the ABC):
History would say no. We're not worried about that, it's something that's been talked about for a period of time. At the end of the day, we believe markets will sort out where the prices need to be, based on supply and demand.
Time will tell how much effect this new entity has on BHP and the iron ore price.
