Why is the Core Lithium share price falling 12% on Tuesday?

The ASX lithium stock closed yesterday trading for $1.87 per share and is currently swapping hands for $1.64 per share.

Bernd Struben

Author bio Bernd Struben earned his BA in economics from the University of Michigan in 1991, with post-graduate studies in environmental economics at the University of Connecticut. Over the years he’s written about and analysed the tourism industry in the Caribbean; Europe’s commercial real estate markets; and, since moving to Australia in 2010, global and Aussie share markets. Bernd studies geopolitical and macroeconomic trends, alongside sector and company specific data, to gauge what he believes could be tomorrow's best investments. In his free time, you might find Bernd at the beach with his family or working on his next science fiction novel. Areas of expertise Australian and global share markets Macroeconomic and geopolitical trends Real estate Education Economics, University of Michigan Favorite investment quote "The four most dangerous words in investing are: 'This time it's different." — Sir John Templeton

Published November 15, 2022 11:54 am AEDT

The Core Lithium Ltd (ASX: CXO) share price is falling hard today, down 12.3% in late morning trade.

The ASX lithium stock closed yesterday trading for $1.87 per share and is currently swapping hands for $1.64 per share.

So, what's going on?

A man thinks very carefully about his money and investments. — Image source: Getty Images

Why the big fall in the Core Lithium share price?

It's not just the Core Lithium share price that's taking a big hit today.

While the S&P/ASX 200 Index (ASX: XJO) is down 0.2%, materials stocks are broadly underperforming, with the S&P/ASX 200 Materials Index (ASX: XMJ) down 1.4% at this same time.

Granted, that's a lot less ground than Core Lithium is losing. Indeed, most of the big name lithium stocks are leading the charge lower today.

The bigger pullback in the lithium stocks looks to be driven by a combination of weakness in US markets overnight combined with an absolutely smashing performance yesterday, likely leading to some profit-taking today.

Yesterday saw the Core Lithium share price close up 11.7%, meaning it's only down 1.8% from Friday's close.

Monday's surge came on the heels of news that China – the world's number two economy and a voracious consumer of lithium – is moving to scale back some of its strict COVID-zero policies.

The rolling lockdowns have thrown up headwinds for China's economic growth, and any easing should see an uptick in the Middle Kingdom's demand for a range of resources, including lithium.

Atop the easing of pandemic restrictions, news also broke that China's government will offer more support for property developers to spur some life back into its beleaguered real estate markets.

This looks to have helped send Core Lithium shares soaring yesterday, setting shares up for a big retrace today.

How has Core Lithium been tracking in 2022?

Despite the big fall today, the Core Lithium share price remains up 161% in 2022. That compares to a year to date loss of 6% posted by the ASX 200.

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