The Santos Ltd (ASX: STO) share price has shot up today, reaching its highest point in more than 2 years.

 It comes as oil prices continue to surge due to concerns Russia’s invasion of Ukraine could cause a supply crunch.

At the time of writing, the Santos share price is $7.90, 2.46% higher than its previous close.

Though, that’s lower than its intraday high – and new 52-week record – of $8.11, representing a 5.18% gain.

For context, the S&P/ASX 200 Index (ASX: XJO) is currently up 0.71%.

Today’s gain marks the first time the oil and gas producer’s stock has cracked the $8 mark since February 2020. Of course, in March 2020, oil prices tanked as the reality of the COVID-19 pandemic took hold of the globe.

More than 2 years later, the Santos share price has once again hit the milestone. Here’s what helped it break the ceiling on Thursday.

Santos share price surges alongside oil price

The Santos share price is well and truly in the green today, as are oil prices.

The black liquid’s value surged again overnight, hitting its highest price since 2013.

Brent crude oil futures have peaked at US$118.22 a barrel so far today, a gain of 4.6%, according to data from CNBC.

Meanwhile, West Texas Intermediate futures hit US$114.70 per barrel, representing a 3.7% increase.

It came as the OPEC decided to uphold its decision to steadily increase its supply of oil yesterday, despite concerns of a global shortage.

As The Motley Fool Australia reported earlier today, Russia exports around 10% of the globe’s oil. Russia is also responsible for around 20% of the world’s gas supply.

Thus, Russia’s invasion of Ukraine, and subsequent decisions by international energy giants BP plc (NYSE: BP), Shell PLC (NYSE: SHEL), and Exxon Mobil Corp (NYSE: XOM) to leave the nation, is likely to hamper the energy commodities’ availability.

Yesterday, Credit Suisse stated it believes an increase in demand from the conflict could see changes in pricing, asset selldowns, and project developments to the benefit Santos.

Interestingly, the Santos share price is far from today’s best performer on the S&P/ASX 200 Energy Index (ASX: XEJ).

That cake has been taken by the Whitehaven Coal Ltd (ASX: WHC) share price. It has gained 9% at the time of writing.

CEO abandons Mineral Resources Limited (ASX: MIN) board

In other news that has the potential to boost the Santos share price, the company’s CEO and managing director, Kevin Gallagher has backed away from his seat on the board of Mineral Resources.

Gallagher’s appointment was announced in January, much to the annoyance of investor group, Australasian Centre for Corporate Responsibility (ACCR).

At the time, ACCR director of climate and environment, Dan Gocher said, “it’s very unusual for the CEOs of ASX-listed companies to maintain non-executive director roles at other companies.”

Santos shareholders will be asking why the Santos board approved this appointment and what are Gallagher’s intentions.

The Santos board’s approval of this appointment suggests the board is out of touch and has failed to comprehend investors’ expectations of modern CEOs.

ACCR director of climate and environment, Dan Gocher

Today, Mineral Resources announced Gallagher abandoned his spot on its board after consulting with Santos shareholders.

The post Santos (ASX:STO) share price rockets to a new 52-week high. Here’s why appeared first on The Motley Fool Australia.

More reading

• Looking for ASX shares in these uncertain times? Top broker says these sectors are now ripe for the picking
• 5 things to watch on the ASX 200 on Thursday
• The price of oil is soaring to new highs and these ASX shares are cashing in
• These 3 ASX 200 shares are topping the volume charts on Wednesday
• The company’s CEO just sold $2.8 million worth of Santos (ASX:STO) shares. Should investors be worried?

Motley Fool contributor Brooke Cooper 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.

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On Wednesday, we looked at three ASX shares that brokers have given buy ratings to this week. Unfortunately, not all shares are in favour with brokers right now.

Three ASX shares that have just been given sell ratings by brokers are listed below. Here’s why they are bearish on them:

Commonwealth Bank of Australia (ASX: CBA)

According to a note out of Goldman Sachs, its analysts have retained their sell rating and $82.94 price target on this banking giant’s shares. This follows news that the bank has signed an agreement to sell a 10% shareholding in Bank of Hangzhou. Goldman sees this partial sale as consistent with the bank’s strategy of focusing on its core operations. And while it expects it to also strengthen its capital position, it still isn’t enough for a change of rating. The broker continues to believe that CBA’s shares are expensive at the current level. The CBA share price is trading at $94.72 on Thursday.

Graincorp Ltd (ASX: GNC)

A note out of Bell Potter reveals that its analysts have retained their sell rating and $6.70 price target on the grain exporter’s shares. Although the broker acknowledges that trading conditions are favourable at present, it doesn’t expect this to last. As a result, it expects the company will struggle to cycle record volumes and trading margins in FY 2023 and FY 2024, which it fears will weigh heavily on its shares. The GrainCorp share price is fetching $8.70 today.

Zip Co Ltd (ASX: Z1P)

Analysts at UBS have downgraded this buy now pay later provider’s shares to a sell rating and cut the price target on them by 80% to a lowly $1.00. UBS made the move to reflect lower long-term profit forecasts, share dilution from its capital raising, and Zip’s overall uncertain outlook. The broker also highlights that Zip now expects to be profitable in FY 2024 following its proposed acquisition of Sezzle Inc (ASX: SZL), which is later than UBS was forecasting. The Zip share price is trading at $1.90 on Thursday afternoon.

The post Top brokers name 3 ASX shares to sell today appeared first on The Motley Fool Australia.

More reading

• Why Coles, Dusk, Monadelphous, and Zip shares are dropping today
• Zip (ASX:Z1P) shares have tumbled 14% since the merger news. Top brokers offer possible reasons why
• ASX 200 (ASX:XJO) midday update: Corp Travel Management’s ACCC boost, Zip downgraded
• Australia’s newest tech unicorn, Zeller, is taking on the ASX banks. Here’s how
• Here’s how this top broker values the CBA (ASX:CBA) share price

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended ZIPCOLTD FPO. 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.

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 A message from our CIO, Scott Phillips:

G’day Fools. If you’re like us, you’re dismayed by the events taking place in Ukraine. It is an unnecessary humanitarian tragedy. Times like these remind us that money is important, but other things are far more valuable. And yet the financial markets remain open, shares are trading, and our readers and members are looking to us for guidance. So we’ll do our best to continue to serve you, while also hoping for a swift and peaceful end to war in Ukraine.

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The Ukraine crisis is impacting economic markets around the world, but analysts believe one particular ASX defence share could gain ground.

This share fell 21% from $2.31 at market close on 2 February to $1.82 at the end of trading on 2 March.

So which Australian defence company are analysts shining a bright light on?

Which ASX defence share?

ASX defence share Electro Optic Systems Holdings Ltd (ASX: EOS) could benefit from escalating geopolitical tensions, according to a report on NAB trade. It says the situation could lead to new defence contracts for the company.

The defence, space, and communication technology company’s shares are currently swapping hands at $1.745, a 4.12% fall so far today. In contrast, the S&P/ASX 200 Index (ASX: XJO) is up 0.75% today.

Citi has placed a “neutral” rating on the company’s share with a price target of $2.23. That is almost 26% more than the share price at the time of writing.

Brokers can see an upside from the redesigning of Spacelink. As Motley Fool Australia reported this week, Electro Optic invested $37 million in Spacelink during FY21 to accelerate engineering and business development.

However, Citi is “waiting for the company to replenish its declining backlog and win material contracts” to turn more positive on the stock.

Electro Optic reported a net loss of $16.8 million in its full-year results on Monday, a 33.2% improvement on the loss in FY20.

The company said it is “well-positioned to support allies currently under intense national security pressure”.

Electro Optic share price summary

The Electro Optic share price has sunk 66% in the past 12 months, while it has lost around 25% year to date.

The company’s shares have shed 11% of their value over the past week.

For perspective, the benchmark ASX 200 index has returned around 5% over the past year.

The company has a market capitalisation of about $266 million.

The post Could this ASX defence share be set to benefit from the Ukraine crisis? appeared first on The Motley Fool Australia.

More reading

• Electro Optic (ASX:EOS) share price plunges 13% on net loss
• Electro Optic (ASX:EOS) share price rockets 18% on ‘breakthrough’ satellite news

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Electro Optic Systems Holdings Limited. The Motley Fool Australia owns and has recommended Electro Optic Systems Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Lake Resources N.L. (ASX: LKE) share price is powering ahead today following the company’s latest announcement.

At the time of writing, the clean lithium developer’s shares are exchanging hands for $1.035 a pop, up 6.15%.

What did Lake Resources announce?

Lake Resources shares are climbing after the company marked its progress on its flagship, Kachi Lithium Project.

According to the release, Lake Resources advised the modular demonstration plant has been dispatched to the Kachi Project in Argentina.

The demonstration plant was designed and built by Lake Resources’ technical partner, Lilac Solutions Inc.

The engineering team in California assembled the ion exchange modules and supporting equipment within 12-metre five shipping containers.

Lake Resources noted that the modular design allows for a “plug and play” approach, once brine feed, power and reagents are connected.

Once constructed at the Kachi Project, the demonstration plant will produce lithium chloride (eluate) representing 2.5 tonnes of lithium carbonate. This will then be converted into high-purity battery quality lithium carbonate for potential offtakers and battery qualification later this year.

The demonstration plant is expected to operate between three to four months.

The disruptive lithium processing technology is said to “cut operating costs and boosts lithium recovery from Kachi Project brines”.

If the demonstration plant is successful and Lake Resources can secure offtakers, then Kachi could become a significant producer globally.

The company is aiming to bring high purity lithium carbonate to market with a low carbon footprint.

Lake Resources managing director, Steve Promnitz commented:

Both Lake and Lilac are very confident that the demonstration plant incorporating Lilac’s proprietary ion exchange process will prove to investors and offtakers that it is scalable and functions well on site by successfully producing a high-quality lithium product.

Lake is well positioned to deliver a major project with consistent high-quality product with substantial ESG benefits.

About the Lake Resources share price

The Lake Resources share price has been one of the best places to invest in the past year, zooming upwards of 170%. While renewed investor sentiment within the battery industry has helped support the share price, the company has been making significant tailwinds.

Based on today’s price, Lake Resources commands a market capitalisation of roughly $1.27 billion, with approximately 1.22 billion shares outstanding.

The post Here’s why the Lake Resources (ASX:LKE) share price is flowing 6% upstream today appeared first on The Motley Fool Australia.

More reading

• Why IGO, Lake Resources, Talga, and Whitehaven Coal shares are charging higher
• Why is the Lake Resources (ASX:LKE) share price frozen today?
• Broker names 3 ASX lithium stocks to buy with huge upside potential

Motley Fool contributor Aaron Teboneras 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.

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) has followed the release of US markets and is storming higher. At the time of writing, the benchmark index is up 0.75% to 7,170.9 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are dropping:

Coles Group Ltd (ASX: COL)

The Coles share price has fallen 3% to $17.05. This has been driven largely by the supermarket giant’s shares trading ex-dividend this morning for its latest distribution. Coles is paying an interim fully franked dividend of 33 cents per share to eligible shareholders at the end of the month on 31 March.

Dusk Group Ltd (ASX: DSK)

The Dusk share price is down 1.5% to $2.62. This morning the specialist retailer announced that its proposed acquisition of Eroma has been terminated. In December, Dusk signed an agreement to acquire the candle making inputs and fragrance oils supplier for $28 million. No explanation was given for the termination of the deal other than it not meeting “certain conditions.”

Monadelphous Group Limited (ASX: MND)

The Monadelphous share price is down 5% to $11.32. The majority of this decline relates to the engineering company’s shares trading ex-dividend this morning. Eligible Monadelphous shareholders can now look forward to receiving its fully franked 24 cents per share interim dividend later this month on 25 March.

Zip Co Ltd (ASX: Z1P)

The Zip share price is down 2.5% to $1.90. This buy now pay later provider’s shares have come under pressure again on Thursday after being the subject of a bearish broker note out of UBS. According to the note, the broker has downgraded Zip’s shares to a sell rating and slashed their price target by 80% to just $1.00.

The post Why Coles, Dusk, Monadelphous, and Zip shares are dropping today appeared first on The Motley Fool Australia.

More reading

• Here’s why the Dusk (ASX:DSK) share price is flaming out today
• Bye bye dividend? Here’s why the Coles (ASX:COL) share price is sliding today
• Zip (ASX:Z1P) shares have tumbled 14% since the merger news. Top brokers offer possible reasons why
• ASX 200 (ASX:XJO) midday update: Corp Travel Management’s ACCC boost, Zip downgraded
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended ZIPCOLTD FPO. The Motley Fool Australia owns and has recommended COLESGROUP DEF SET. The Motley Fool Australia has recommended Dusk Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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A message from our CIO, Scott Phillips:

“G’day Fools. If you’re like us, you’re dismayed by the events taking place in Ukraine. It is an unnecessary humanitarian tragedy. Times like these remind us that money is important, but other things are far more valuable. And yet the financial markets remain open, shares are trading, and our readers and members are looking to us for guidance. So we’ll do our best to continue to serve you, while also hoping for a swift and peaceful end to war in Ukraine.”

---

Global investment bank Morgan Stanley has outlined some sectors to look at with all of the ongoing global uncertainty. This may mean some ASX shares are opportunities.

Lisa Shalett is the chief investment officer of the wealth management division of Morgan Stanley.

Ms Shalett noted that the Russian invasion of Ukraine caused a lot of volatility in the global financial markets, with shares being sold off and commodity prices increasing after the attack started. She expects that volatility will remain elevated. The political and economic situations are in “flux”.

Is it time to buy ASX shares?

At this stage, the investment expert isn’t sure if the conflict in Ukraine will create lasting or just momentary effects on the market.

Morgan Stanley is wary of additional issues that could continue to cause problems.

Three worries

One thing to consider is how the US Federal Reserve will respond to these events. Inflation, and the expectation of more inflation, has been increasing. Energy prices have risen further because of Russia’s energy role in the global economy.

Ms Shalett says that Morgan Stanley thinks the Fed will continue on its path of tightening quickly this year. Fed Chair Jerome Powell has indicated that March will see a 25 basis point increase to the US interest rate.

Another issue is the potential weakening of demand for goods consumption with a shift to services like travel, leisure, live entertainment and dining. She suggested that some of the ‘stay at home’ beneficiaries may see some “give-back” of the increased demand they had seen. That may have an implication for some ASX shares.

The third potential issue is inflation pressure on profit margins. Morgan Stanley suggests that the pricing power to deal with inflation may not be sustainable. But if it is somehow maintained, this could lead to further inflation. Ms Shalett said the investment bank was seeing mounting pressure on earnings forecasts, with negative first-quarter guidance rolling in from many companies in the US. This was particularly applicable for some tech businesses.

Which sectors and ASX shares might be opportunities?

Whilst cautioning investors against jumping into the market straight away, Ms Shalett said investors should consider recalibrating expectations and sticking with quality names with strong cash flow and earnings achievability that aren’t fully priced.

The Morgan Stanley wealth CIO pointed to financials, energy, materials, consumer services and healthcare as ripe for stock-picking ideas.

Looking at ASX shares, some of the businesses that are currently rated as buys by Morgan Stanley in some of those sectors include: Bank of Queensland Limited (ASX: BOQ), Santos Ltd (ASX: STO) and Sonic Healthcare Ltd (ASX: SHL).

The post Looking for ASX shares in these uncertain times? Top broker says these sectors are now ripe for the picking appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• The price of oil is soaring to new highs and these ASX shares are cashing in
• These 3 ASX 200 shares are topping the volume charts on Wednesday
• The company’s CEO just sold $2.8 million worth of Santos (ASX:STO) shares. Should investors be worried?
• Here’s how the Bank of Queensland (ASX:BOQ) share price performed in February

Motley Fool contributor Tristan Harrison 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 recommended Sonic Healthcare Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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ASX shares have come under pressure in 2022, following on their 21-month long post-pandemic charge higher.

Up 2.1% over the past 5 days, the S&P/ASX 200 Index (ASX: XJO) remains down 5.5% for the year.

And it’s been far tougher for tech shares.

The S&P/ASX All Technology Index (ASX: XTX) is down 20.5% since the opening bell on 4 January.

Why are ASX shares under pressure this year?

The first force to batter ASX shares in the New Year was the dawning realisation that inflation is rising faster, and likely to be more persistent, than most economists had forecast last year. That’s brought forward likely interest rate rises from central banks across the world. And this has hit growth stocks – like many ASX tech shares – particularly hard.

The second negative force dragging on ASX shares is nuclear armed Russia’s initial aggressive posturing and then outright invasion of Ukraine.

Together these forces have seen stocks sell off across the world.

The US S&P 500, as an example, is down 8.5% year-to-date.

When markets are down, investors begin to ponder whether the time is right to step in and buy the dip.

Now there are almost certainly some specific ASX shares poised to outperform from here. But some of the world’s top brokers are cautioning that entering the market today may be more like catching a falling knife than buying the dip.

Brace for more volatility ahead

Lisa Shalett is Morgan Stanley’s chief investment officer of wealth management.

Shalett said that, despite the recent market rebound since the initial selling on news of Russia’s invasion, “volatility will likely remain elevated, and both the political and economic situations are in flux”.

With uncertainty about the duration of the war in Ukraine and how long it may impact the market, Shalett added, “We don’t believe now is the time for eager buyers to enter what might look like an oversold market.”

Morgan Stanley is wary of 3 other challenges that could linger for a while. Namely:

• Uncertainty and complexity of the US Federal Reserve’s policy-tightening path
• Potential weakening of demand for goods consumption
• Inflation’s pressure on corporate profit margins

With that in mind Shalett said:

We advise investors against jumping back into the market, even though recent declines have made valuations look more attractive. Investors should watch earnings-revision trends and bond-market dynamics to gain conviction around a buyable bottom.

While she wasn’t specifically addressing ASX shares, for those investors who are looking to add to their holdings, she added, “Consider recalibrating expectations and sticking with quality names with strong cash flow and earnings achievability that aren’t fully priced.”

Chris Nicol, Morgan Stanley’s chief Australian equity strategist, noted that even if Russia’s conflict with Ukraine abates, the spectre of central bank policy tightening will not.

According to Nicol (quoted by the Australian Financial Review):

The sobering thought is that the relief that initially comes from any moderating of geopolitical risks is likely met with the reality of more persistent inflationary signals and sustained resolve in central bank intent to normalise monetary policy settings.

This would take investors back to a future heavily influenced by rising yields and rising rates – a future that was being actively rotated towards in the first six weeks of this calendar year.

As for specific sectors that could offer some good stock-picking ideas, Shalett named financials, energy, materials, consumer services and healthcare.

Rocketing oil prices could drag on ASX shares

While soaring crude and LNG prices will offer tailwinds to ASX energy shares, many ASX shares could be negatively impacted.

Goldman Sachs economist Dominic Wilson points to the potential for continued high oil prices coupled with likely tightening from central banks like the US Fed as reason for investors to be cautious.

According to Wilson (quoted by the AFR):

We think the market may be underestimating the risks of tighter supply on oil pricing, which remains a key risk from the ongoing conflict – so we think the risk premium here should probably be larger.

And we think the market is starting to overestimate the impact that the conflict will have on the Fed trajectory, and so think that front-end rates are ultimately likely to reverse this recent rally.

Despite the obvious uncertainties that the invasion brings, those two areas are likely to remain important themes in our market forecasts.

We’ll leave off the cautions for buying the dip in ASX shares or international equities with JPMorgan.

Among their top concerns, the broker’s analysts believe fast rising crude prices will further drive up inflation.

Comparing the war in Ukraine to the 1990 Gulf War, which saw US markets nosedive, JPMorgan’s analysts said, “We see the risk/reward scenario clearly pointing to further downside near term: The maths suggests there is further downside ahead … and it may not be small.”

The post Buying the dip in ASX shares? A word of caution from top brokers appeared first on The Motley Fool Australia.

More reading

• Why IGO, Lake Resources, Talga, and Whitehaven Coal shares are charging higher
• Are ASX green energy shares losing their appeal amid rising oil and gas prices?
• All eyes on energy: Origin (ASX:ORG) share price surges 4%
• Here’s why the Dusk (ASX:DSK) share price is flaming out today
• What’s the outlook for ASX retail shares like Kogan (ASX:KGN)?

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.

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a decent gain. At the time of writing, the benchmark index is up 0.7% to 7,171.7 points.

Four ASX shares that are climbing more than most today are listed below. Here’s why they are charging higher:

IGO Ltd (ASX: IGO)

The IGO share price is up 4.5% to $12.33. Investors have been buying this battery materials producer’s shares following a strong night of trade for base metals. The highlight was arguably the nickel price, which according to CommSec rose by 3.6% to US$26,489 per tonne overnight. IGO owns and operates the Nova nickel-copper-cobalt operation in Western Australia.

Lake Resources N.L. (ASX: LKE)

The Lake Resources share price is up 6% to $1.03. This morning the lithium developer revealed that the demonstration plant has been assembled and dispatched from California to the Kachi Project by Lake Resources’ technical partner, Lilac Solutions. Management notes that the disruptive lithium processing technology cuts operating costs and boosts lithium recovery from Kachi Project brines, while protecting scare water resources.

Talga Group Ltd (ASX: TLG)

The Talga share price has jumped 9.5% to $1.51. Investors have been buying the graphite producer’s shares following the release of an update on drilling activities at its Vittangi Graphite Project in northern Sweden. Management notes that its drilling activities have returned world-class grades, which it believes paves the way to upgrade Europe’s largest natural graphite resource for Li-ion batteries.

Whitehaven Coal Ltd (ASX: WHC)

The Whitehaven Coal share price has risen 10% to $3.93. This coal miner’s shares have been in demand with investors after coal prices surged higher. For example, according to CommSec, the thermal coal price rocketed 40% to a record high of US$440 per tonne. This is being driven by European economies seeking alternatives to Russian natural gas.

The post Why IGO, Lake Resources, Talga, and Whitehaven Coal shares are charging higher appeared first on The Motley Fool Australia.

More reading

• Are ASX green energy shares losing their appeal amid rising oil and gas prices?
• ASX 200 (ASX:XJO) midday update: Corp Travel Management’s ACCC boost, Zip downgraded
• Here’s why this ASX graphite share just leapt 9%
• Why is everyone suddenly talking about Whitehaven Coal (ASX:WHC) shares?
• Why did the Whitehaven Coal (ASX:WHC) share price surge 20% in February?

Motley Fool contributor James Mickleboro 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.

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As the tensions in Europe continue to increase due to the Russian invasion of Ukraine, so do global oil and gas prices.

In fact, according to Trading Economics, the price of WTI Crude oil jumped to an 11-year high yesterday, hitting more than $112 per barrel.

Meanwhile, in order to regulate prices, the United States and a number of other countries have agreed to release up to 60 million barrels of emergency oil reserves.

So what does this mean for renewable energy companies?

Let’s take a look…

Traditional fuel sources skyrocket

Over the last month, the S&P/ASX 200 Energy Index (ASX: XEJ) has been the best performing sector on the ASX, increasing by 12.75%, with the S&P/ASX 200 Materials Index (ASX: XMJ) coming in second.

At time of writing, the energy sector is up 3.2% so far today.

And in correlation, many traditional fossil fuel companies have been benefitting from the oil and gas price hikes. For example, natural gas giant Woodside Petroleum Limited (ASX: WPL), has seen its share price climb by about 22% over the past month. In fact, the Woodside share price has hit a new 52-week high today of $31.99, continuing to climb after yesterday’s milestone.

Similarly, the Whitehaven Coal Ltd (ASX: WHC) share price has hit a new 52-week high today of $3.95. Over the last month, its shares have increased by around 40%.

ASX renewable energy shares not so green

On the other side of the fence, a handful of ASX renewables shares haven’t seen the same price gains.

Energy, transport and social infrastructure company Infratil Ltd (ASX: IFT) has seen its shares lift by around 4.8% over the past month. They have also risen by 12.5% over the past 12 months.

It’s been a contrasting tale for two other ASX renewable energy shares. Contact Energy Limited (ASX: CEN) shares are trading just over 4% higher over the past month, whereas the Mercury NZ Ltd (ASX: MCY) share price has slipped 0.37%.

As these price movements are significantly lower than fossil fuels shares, some investors may be concerned their environmental, social, and governance approach to investing (ESG) may be coming at the expense of potential profits.

Investors wanting renewable change

However, despite increased demand from traditional fuel sources, some investors are remaining positive about seeking climate change solutions.

Following Woodside’s climate report and future target report released yesterday, the Investor Group on Climate Change (IGCC) released a report today, calling these targets “often inadequate, or hard-to-assess”.

IGCC director of corporate engagement Laura Hillis said:

For the first time, public companies have a clear and comprehensive picture of what investors want in businesses’ plans to get ready for a net zero economy. Australia’s biggest superannuation and investment funds have made their expectations very clear, and we think businesses will appreciate that.

This guide should help raise the bar for Australian businesses as they seek to align with the expectations of the market in a rapidly decarbonising world.

Renewable energy expected to rebound

As reported by The Australian Financial Review on Wednesday, BlackRock Investment Institute chief regional strategist Ben Powell says the renewable energy sector is brighter than ever. He suggests the current unstable energy situation instead symbolises a need to transition to clean energy solutions.

This energy transition is ongoing and if anything, some of the vulnerabilities have been made very clear in the last few weeks, and the importance of the investment into the energy transition infrastructure is even clearer.

It’s not only a green issue, but also a broader supply issue now. We would see this as an accelerant to the transition towards energy sources of the future because energy sources of the past have shown to be fraught with challenges un the last few weeks.

With that in mind, investors will no doubt be keeping a keen eye on the evolving situation in Europe, and the effect it has on both traditional and renewable ASX energy shares.

The post Are ASX green energy shares losing their appeal amid rising oil and gas prices? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• The price of oil is soaring to new highs and these ASX shares are cashing in
• Black gold! 3 ASX energy shares pumping new 52-week highs today
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• Woodside (ASX:WPL) shares are up 6% today. Here’s the lowdown

Motley Fool contributor Alice de Bruin 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.

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The S&P/ASX 200 Index (ASX: XJO) is enjoying some decent gains at this point in Thursday’s trading day. At the time of writing, the ASX 200 is up a robust 0.56%. But that’s nothing compared to the Origin Energy Ltd (ASX: ORG) share price.

Origin shares are presently up a very pleasing 3.1% at $5.82 a share after closing at $5.62 a share yesterday and opening at $5.79 a share this morning.

So why are Origin shares so handily outperforming the market as it currently stands?

Well, it’s not due to any major news or announcements out of the company itself, so let’s clear that up.

But it’s the huge spike in energy markets that we’ve seen over the past week or so that could be playing a major role here. Raw energy costs have exploded over the past few weeks, largely as a result of the current crisis in Ukraine. Brent crude is now well over US$100 a barrel. That’s a sharp rise from the sub-US$80 a barrel prices that were with us at the start of 2020. In fact, according to Bloomberg, the price of Brent futures are now above US$115 a barrel. 

Origin share price rises amid soaring commodities, new hydrogen plans

As my Fool colleague Zach covered yesterday, the Bloomberg Commodity Index (BCOM), which tracks a global basket of commodities, has just seen its largest rise in over a decade. And the main culprits are crude oil, gas and gold. Not to mention ‘battery metals’ like lithium and copper. 

Since Origin is an energy retailer, rising energy prices can be thought of as beneficial to the company. 

We also saw Origin announce plans for a new hydrogen hub on Monday, which also elicited a positive reaction from investors at the time. Origin is partnering up with Orica Ltd (ASX: ORI) to plan a new hydrogen hub in Newcastle, New South Wales. It is aiming to deliver ‘green hydrogen’ by using electricity sourced from renewable sources in a 55-megawatt electrolyser. 

Perhaps the recent news that Origin will be shutting its coal-fired Eraring power plant in NSW earlier than expected (by August 2025) is also giving investors a confidence boost. 

Whatever the reasons for Origin’s rise today, it is no doubt making its shareholders very happy. 

At the current Origin Energy share price, this ASX 200 energy utility company has a market capitalisation of $10.22 billion, with a dividend yield of 2.45%. 

The post All eyes on energy: Origin (ASX:ORG) share price surges 4% appeared first on The Motley Fool Australia.

More reading

• Why did AGL (ASX:AGL) shares smash Origin in February?
• Why is the Origin (ASX:ORG) share price edging lower today?
• Origin (ASX:ORG) share price lifts amid green hydrogen news
• Origin (ASX:ORG) share price slides 7% but UBS is still bullish. Here’s why
• Australia’s largest coal power plant set for early D-day. What it means for Origin (ASX: ORG) shares

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 Bruce Jackson.

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