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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Netflix (NASDAQ: NFLX) surprised investors when management shared its plans to start offering an ad-supported tier of the streaming service in the near future. The company has long eschewed the idea of advertisements on its platform, but it’s gotten to work quickly as it looks to stem subscriber losses.

Importantly, the company is looking to partner with other companies in order to streamline the operation. “We can be a straight publisher and have other people do all of the fancy ad-matching,” co-CEO Reed Hastings said during Netflix’s first-quarter earnings call. With the massive popularity of Netflix, those “other people” could have a big opportunity ahead.

Here are four companies that could benefit from Netflix’s advertising plans.

1. Alphabet

Alphabet‘s (NASDAQ: GOOG) (NASDAQ: GOOGL) Google is an absolute beast when it comes to digital advertising. That said, its premium video advertising experience is limited. While YouTube generated $29 billion in ad revenue for the company last year, Netflix might want more premium advertisements than the standard ad seen next to user-uploaded videos on YouTube. Something more akin to television commercials. 

Google has been pushing into that market. It operates YouTube TV, where it’s tasked with filling a couple of minutes of advertising for every hour of programming. It’s also worked with Disney since late 2018, serving ads across video, desktop, and mobile.

The real value Google brings to the table is that it has a global user base, just like Netflix. In fact, YouTube is the only streaming service more widely used than Netflix. If the streaming service company wants a simple one-stop shop, Google is it.

2. Comcast

Comcast‘s (NASDAQ: CMCSA) media subsidiary NBCUniversal is a massive ad seller and a leader in ad technology for television. Its Freewheel ad technology could be the backbone for streaming ads on Netflix, as it already is on its own Peacock platform and several other streaming services. 

Moreover, NBCUniversal already has an ad sales team set up in the U.S. and Europe that could source premium ads for all the inventory coming to Netflix. As such, Netflix might be able to generate the highest revenue per ad impression in those regions by partnering with NBCUniversal.

Despite NBCUniversal’s competitive position against Netflix, its ad-tech platform is widely used throughout the media industry. Disney used Freewheel before it switched to Google, for example. So despite the conflict of interest, it’s capable of supporting other media companies.

For Netflix to work with NBCUniversal, it may need to find an additional partner or hire some staff in-house for ad sales and integration outside of Europe and the U.S. It’s not clear if that’s something it’s looking to do, but outsourcing could be difficult as The Wall Street Journal reports NBCUniversal is looking for an exclusive contract.

3. Roku

Rumors began swirling that Netflix was interested in buying Roku (NASDAQ: ROKU) earlier this month. That might not be the best investment Netflix could make, and partnering with the connected-TV platform could be a much more reasonable choice. 

Roku could benefit from an ad-supported tier by using it as an opportunity to renegotiate its distribution agreement with Netflix. Roku may look to take a share of the advertising on Netflix, participating in the upside potential of the product instead of taking a flat commission on customers who sign up for the service through its platform. It could also push Netflix to buy ads on its home screen, something it’s managed to get Netflix’s competitors to do in its negotiations. Disney, for example, often does home-screen takeovers for new Disney+ releases on Roku’s platform.

4. The Trade Desk

The Trade Desk (NASDAQ: TTD) offers a demand-side platform that connects media ad buyers with premium connected-TV ad inventory. Netflix could offer excess inventory that it or its partners haven’t sold directly through The Trade Desk, enabling it to maintain high-quality ads while keeping a lean advertising sales team. 

The Trade Desk generates revenue by charging ad buyers a percentage of gross spend on its platform. If it has more premium ad inventory to fill via a partnership with Netflix, it ought to be able to increase revenue. Estimates put the amount of annual advertising spend on Netflix in the U.S. and Canada alone at around $2.5 billion. Granted, that likely wouldn’t all go through The Trade Desk, depending on Netflix’s other ad-tech partners, but a significant chunk could end up coming from its buyers.

Netflix could be a pivotal partner

As Netflix moves toward launching its ad-supported tier, investors will want to pay close attention to which company it partners with, as they could provide a significant boost to revenue over time. While it might take some time for advertising to become a significant part of Netflix’s business, the impact could be seen much more quickly for any of the above companies. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post 4 potential winners from Netflix’s advertising plans appeared first on The Motley Fool Australia.

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Adam Levy has positions in Alphabet (C shares), Netflix, Roku, and Walt Disney. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares), Alphabet (C shares), Netflix, Roku, The Trade Desk, and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Comcast and has recommended the following options: long January 2024 $145 calls on Walt Disney and short January 2024 $155 calls on Walt Disney. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Netflix, The Trade Desk, and Walt Disney. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Xero Limited (ASX: XRO) share price is down almost 6% today with the cloud accounting provider losing some of the gains it’s made over the last week.

At the time of writing, Xero shares were fetching $77.81 apiece, a 5.76% drop on yesterday’s close.

Overnight, there was pain in the US tech sector. That’s why the Betashares Nasdaq 100 ETF (ASX: NDQ) price is currently down by around 3%. Also last night, the Microsoft (NASDAQ: MSFT) share price dropped around 3% while Apple Inc (NASDAQ: AAPL) also dropped by around 3%.

There has been much volatility on share markets this year amid concerns about inflation and interest rates.

The Xero share price and other ASX tech shares are often influenced on a day-to-day basis by what happens in the US share market.

Wider ASX share market fall

It’s not just Xero that is down. There are plenty of other shares that are in the red. The S&P/ASX 200 Index (ASX: XJO) is currently down 1.37%.

Blue chip shares Commonwealth Bank of Australia (ASX: CBA) and BHP Group Ltd (ASX: BHP) are also down around 1% at the time of writing.

However, there are many others that are down much further. For example, the Carsales.com Ltd (ASX: CAR) share price is down 12% while Block Inc (ASX: SQ2) is down 6.77%.

Xero share price snapshot

Since the beginning of the 2022 calendar year, the Xero share price is down 44%.

The company has a current market capitalisation of around $11.7 billion.

The post Why is the Xero share price slipping 6% today? appeared first on The Motley Fool Australia.

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• How did the Coles share price stay positive in June while the ASX 200 slumped?
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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 positions in and has recommended Apple, BETANASDAQ ETF UNITS, Block, Inc., Microsoft, and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has positions in and has recommended BETANASDAQ ETF UNITS, Block, Inc., and Xero. The Motley Fool Australia has recommended Apple and carsales.com Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The All Ordinaries Index (ASX: XAO) is experiencing a bit of a pullback today. At the time of writing, the All Ords has slipped by 1.45% and is back below 6,900 points. But that pales in comparison to the Rural Funds Group (ASX: RFF) share price today.

Rural Funds shares are currently down a painful 3.47% to $2.64 each. That comes after the agricultural real estate investment trust (REIT) closed at $2.74 yesterday, but opened at $2.69 this morning.

So why is Rural Funds underperforming so dramatically today?

Why is the Rural Funds share price falling on Wednesday?

Well, it’s for one of the best reasons to have your shares fall in value. Today is the day that Rural Funds shares have traded ex-dividend for the REIT’s upcoming dividend distribution.

When an ASX share declares a dividend payment for shareholders, it also declares a date that new shareholders are excluded from being eligible to receive the upcoming payment. This is known as the ex-dividend date.

Seeing as new Rural Funds shareholders from today are ineligible for the company’s next payment, the payment’s value has left the Rural Funds share price. That is why we are seeing such an apparent drop in value for this REIT today.

So investors can now look forward to the quarterly dividend distribution of 2.93 cents per share that will be paid on 29 July next month. Rural Funds Group typically doles out four quarterly dividend distributions a year.

This upcoming payment will be the fourth to consist of a 2.93 cents per share payment. June 2021’s distribution was worth 2.82 cents per share, so this payment represents a 3.9% increase over the previous year.

At the current Rural Funds share price, this agricultural ASX REIT has a market capitalisation of $1.01 billion. Put together, the past four dividend distributions of 2.93 cents per share each now give Rural Funds a trailing yield of 4.44% at this pricing.

The post Why the Rural Funds share price is falling today appeared first on The Motley Fool Australia.

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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 positions in and has recommended RURALFUNDS STAPLED. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Hazer Group Ltd (ASX: HZR) share price is defying the S&P/ASX 200 Index (ASX: XJO) to head north today.

This comes after the hydrogen producer announced a senior leadership change.

At the time of writing, Hazer shares are up 7.5% to 64.5 cents.

In comparison, the benchmark ASX 200 index is down by 1.34% to 6,672.7 points following losses on Wall Street overnight.

Hazer appoints new CEO

In its statement, Hazer advised it has appointed Glenn Corrie as its newest CEO, replacing current managing director Geoff Ward.

As part of an agreed succession plan, the board is bolstering its leadership team to address the company’s next phase of development.

Corrie brings more than 25 years of international energy industry, private equity, and investment experience.

He has a track record of successfully leading large-listed and private equity-backed companies in driving growth.

Furthermore, Corrie holds substantial capital market knowledge across the equity and debt markets. This includes extensive global mergers and acquisitions experience across Asia, China, Africa, Latin America, the US, and Europe.

Corrie is currently an executive board member of Suriname’s state oil company Staatsolie.

Prior to that, Corrie held the title of CEO and managing director of ASX-listed Sino Gas and Energy.

He was also the founding CEO of NEO Energy, a private equity-backed oil and gas emerging company.

Corrie will be based at the company’s headquarters in Perth and commence the top position on 10 October 2022.

In the meantime, Ward will remain in his current capacity to ensure a smooth transition until the formal takeover.

Management commentary

Hazer chair Tim Goldsmith touched on the appointment, saying:

We are delighted to welcome a leader of Glenn’s calibre to head a strong team as we enter the next phase of growth for Hazer and look forward to Glenn driving the company forward and realising the potential of the technology in helping to meet the sustainable energy needs of our changing world.

…Our company has undergone a significant transformation over the last four years with the completion of the Woodman Point Commercial Demonstration Project and securing the Burrard Hydrogen Project in British Columbia.

We look forward to driving these projects to demonstrate the huge potential of our technology to provide clean energy and emissions reduction in difficult-to-abate sectors…

Hazer share price snapshot

Over the last 12 months, the Hazer share price has lost 27% and is down 47% year to date.

Its shares hit a 52-week low of 47 cents each last Friday before rebounding slightly in the days following.

Based on today’s price, Hazer presides a market capitalisation of roughly $100 million.

The post Hazer shares climb 8% amid CEO appointment appeared first on The Motley Fool Australia.

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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 Scott Phillips.

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At lunch on Wednesday, the S&P/ASX 200 Index (ASX: XJO) recovery has run out of steam and the market has tumbled lower. The benchmark index is currently down 1.3% to 6,677.7 points.

Here’s what is happening on the ASX 200 today:

Carsales sinks following capital raising

The Carsales.Com Ltd (ASX: CAR) share price has dropped deep into the red. This follows the completion of the auto listings company’s institutional entitlement offer. Carsales raised approximately $842 million at a 14.5% discount of $17.75 per new share. The proceeds from this and its upcoming retail entitlement offer will be used to fund the acquisition of the remaining 51% of Trader Interactive.

Pilbara Minerals’ update

A strong quarterly update hasn’t been enough to stop the Pilbara Minerals Ltd (ASX: PLS) share price from dropping today. That update revealed that the lithium miner’s fourth quarter production is expected to be 123,000 to 127,000 dry metric tonnes (dmt) of spodumene concentrate. The high end of this guidance range represents a 56% increase on the previous quarter. Pilbara Minerals expects to end FY 2022 with a cash position of $850 million to $855 million.

Liontown signs agreements with Ford

The Liontown Resources Limited (ASX: LTR) share price is charging higher today after the release of a couple of positive announcements. One reveals that the lithium developer has signed offtake and funding agreements with auto giant Ford. The other reveals that these agreements have led to the Liontown board approving the development of the Kathleen Valley Lithium Project.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Wednesday has been the Liontown share price with a 5% gain. This follows the announcement of funding and offtake agreements with Ford. Going the other way, the Imugene Limited (ASX: IMU) share price is the worst performer with a 14% decline. This immuno-oncology company’s shares rocketed higher earlier this week on positive study results but have given back the majority of these gains now.

The post ASX 200 midday update: Carsales sinks, Liontown jumps on Ford agreements appeared first on The Motley Fool Australia.

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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 recommended carsales.com Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX lithium stocks could be attractive buys according to the latest thoughts from experts. There has been a lot of volatility in the ASX share market over the last few months. The lithium miners haven’t escaped the disruption.

The market has pushed down the valuation and price/earnings ratios of a lot of businesses. But ASX lithium stocks could be opportunities as demand for lithium batteries and electric vehicles is expected to keep growing over time.

While a business isn’t necessarily a buy just because it has fallen, experts believe that these two ASX shares are clear buys.

Pilbara Minerals Ltd (ASX: PLS)

Pilbara describes itself as a listed pure-play lithium company, owning 100% of the world’s largest, independent hard-rock lithium operation. Located in Western Australia’s resource-rich Pilbara region, the Pilgangoora Project produces a spodumene and tantalite concentrate (lithium).

It also has a goal of growth and diversification, by being involved in the downstream lithium supply chain by supplying both lithium raw materials and being a chemicals supplier.

Ord Minnett is one of the brokers that rates Pilbara Minerals as a buy right now, with a price target of $4.25. That implies a possible rise of over 70% over the next year.

One of the reasons for its optimism in the valuation of the ASX lithium stock is the fact that it’s still seeing high lithium prices.

Pilbara recently revealed that a Battery Material Exchange (BMX) pre-auction bid delivered a spot sale of over US$7,000 per dry metric tonne (dmt) for 5,000dmt after adjusting for lithia content and freight costs.

The company expects to hold the next BMX auction in the second week of July 2022. Pilbara Minerals’ boss called this an “exceptional outcome” and that demand remains “incredibly strong” with a “continued healthy outlook for the foreseeable future.”

Ord Minnett thinks that the Pilbara Minerals share price is valued at under 4 times FY23’s estimated earnings.

Allkem Ltd (ASX: AKE)

Allkem describes itself as a “speciality lithium chemicals company and borates producer with a global portfolio of diverse and high-quality lithium chemicals.” It’s headquartered in Argentina and it has lithium brine and borax operations in Argentina, a hard-rock lithium operation in Australia and a lithium hydroxide conversion facility in Japan.

The ASX lithium stock is liked by the broker Macquarie, with a price target of $17. That implies a potential rise of more than 50%. The broker sees the benefits of the high lithium price but notes that logistics and energy costs will impact profitability in the longer term.

Allkem noted at the start of June that lithium carbonate and spodumene prices were strong. It said the quarter for the three months to June 2022, the average price received for lithium carbonate is expected to be approximately 14% above its prior guidance at US$40,000 per tonne, on sales of approximately 3,500 tonnes.

The company said that customers continue to value the security of supply which is reflected in a fully committed order book for the rest of the 2022 calendar year.

The post After the sell-off, experts think these 2 lithium ASX stocks are great buys appeared first on The Motley Fool Australia.

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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 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.

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The Pilbara Minerals Ltd (ASX: PLS) share price is in the red today despite a positive production update.

The lithium producer’s shares are currently trading at $2.37, a 0.84% fall. However, in earlier trade the company’s share price leaped 4% higher.

For perspective, multiple ASX lithium shares are in the red today. Core Lithium Ltd (ASX: CXO) is falling 5.77%, Lake Resources NL (ASX: LKE) is descending 2.41%, and Allkem Ltd (ASX: AKE) is down 1.21%. The S&P/ASX 200 Materials Index (ASX: XMJ) is sliding 1.49%.

So what did Pilbara Minerals reveal to the market today?

‘Significant’ production increase

Pilbara provided a lithium production update from the company’s Pilgangoora Project in Western Australia.

Pilbara Minerals is estimating production of 123,000 to 127,000 dry metric tonnes (dmt) of spodumene concentrate in the June quarter. This is a 54% boost on the March quarter, when 81,431 dmt was produced.

The company estimates it will achieve June quarter shipments of 127,000 to 132,000 dmt, up 118% from the previous quarter.

Pilbara forecasts a substantial increase in its cash position to $850-$855 million at 30 June. This is a $565 million boost on the quarter ending 31 March. Pilbara attributed this increase to “strong market pricing conditions” and “increased shipment volumes”.

Pilbara Minerals CEO Dale Henderson said in a company statement:

Despite various operational challenges during the year, including impacts from COVID-19 and labour shortages, the company is pleased to have finished FY22 strongly to achieve the higher end of production guidance.

After overcoming production challenges early in the June quarter, Pilbara Minerals is closing the June quarter with a strong operational performance that demonstrates the Company’s ability to achieve annualised production targets previously announced.

Looking ahead, Pilbara Minerals is planning further Battery Metals Exchange (BMX) auctions, including in the second week of July. In a recent BMX auction in June, the company accepted a bid of US$7,017 per dmt for lithium.

The company’s quarterly report for June is due on 28 July.

Pilbara Minerals share price snapshot

Pilbara Minerals shares have exploded 66% in the past 12 months. But they have descended nearly 26% year to date.

For perspective, the S&P/ASX 200 Materials index has lost more than 5% in the past year and 3.5% year to date.

Pilbara Minerals has a market capitalisation of $7 billion based on today’s share price.

The post Pilbara Minerals share price slides despite lithium production increasing 54% appeared first on The Motley Fool Australia.

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More reading

• After the sell-off, experts think these 2 lithium ASX stocks are great buys
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Evolution shares take out most traded after experiencing worst fall in more than a decade
• Down 18% in a month, is the Pilbara Minerals share price now a buy?
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Motley Fool contributor Monica O’Shea 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.

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ASX tech share Nearmap Ltd (ASX: NEA) is cashed up and ready to rumble in 2022.

The company – which boasts a market capitalisation of around $574 million according to the ASX – had approximately $110 million in its coffers at the end of the first half.

Let’s take a closer look at the latest on Nearmap’s cash position.

How much cash does Nearmap hold?

Nearmap rejoiced in its growth through the first half of financial year 2022, bolstering its cash position. The company’s CEO and managing director Rob Newman commented on its “very strong balance sheet” back in February.

As of 31 December 2021, Nearmap held $109.8 million cash and no debt.

That’s despite spending $13.6 million over the course of the first half – $4.5 million of which went towards litigation costs.

The legal action was brought by US companies Eagle View Technologies and Pictometry International Corp. They have taken Nearmap to court in the US, alleging patent infringement. Nearmap has vowed to “vigorously defend” against the claims.

The other $9 million went towards research and development initiatives, the company said.

Nearmap has also recently celebrated a number of annual contract value (ACV) milestones.

In March, it announced it had achieved $150 million of ACV across its group portfolio.

Additionally, after announcing its North American business’ ACV had surpassed US$50 million in December, the company announced its North American government sector generated US$2 million in ACV over the third quarter alone.

Nearmap share price snapshot

At the time of writing, the Nearmap share price is $1.075, 6.52% lower than its previous close.

For context, the broader market is also in the red today following Wall Street’s poor performance overnight.

The S&P/ASX 200 Index (ASX: XJO) is currently down 1.29% and the All Ordinaries Index (ASX: XAO) is slumping 1.4%.

The company’s shares have also slipped 31% since the start of 2022 and 41% since this time last year.

The post Own Nearmap shares? Here’s how much cash the company has up its sleeves appeared first on The Motley Fool Australia.

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• This is what I’d do with these 3 battered ASX shares: fund manager
• Why is the Nearmap share price soaring 5% on Thursday?
• Why has the Nearmap share price dumped 20% since the end of March?

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 positions in and has recommended Nearmap Ltd. The Motley Fool Australia has positions in and has recommended Nearmap Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Westpac Banking Corp (ASX: WBC) share price is edging ever so slightly higher to $19.77 on Wednesday morning.

That’s despite the market sinking and the banking giant being the subject of a less than positive broker note.

What is the broker saying?

According to a note out of Jefferies, its analysts have retained their hold rating but cut their price target on the Westpac share price by 16% to $18.15.

This implies potential downside of 8% for investors over the next 12 months from current levels.

Jefferies made the move on the belief that consensus estimates could be wide of the mark.

This is due to a combination of the treatment of $1 billion notable item loss on the bank’s Life Insurance divestment and growing risks from competition for deposits and inflation.

The broker fears that the latter could have a big impact on Australia’s oldest bank’s $8 billion FY 2024 cost base target.

Is anyone positive on the Westpac share price?

The good news is that not there are a couple of brokers that are positive on the Westpac share price.

One of those is Citi, which late last month retained its buy rating and $29.00 price target on the bank’s shares. This implies potential upside of almost 47% for investors over the next 12 months.

But it gets better. With Citi forecasting a fully franked dividend of $1.55 per share in FY 2023, a very generous yield of 7.8% could be awaiting investors if the broker is on the money with its recommendation.

Elsewhere, last week, Morgan Stanley put an overweight rating and more modest price target of $22.30 on Westpac’s shares. This implies 13% upside from current levels.

The post Westpac share price inches ahead despite broker cutting its price target by 16% appeared first on The Motley Fool Australia.

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More reading

• Analysts name 2 ASX dividend shares to buy today
• How much has Westpac paid in dividends in the past 5 years?
• CBA share price leads the big four as banks outperform ASX 200 on Monday
• Here are the details about the Westpac dividend being paid today
• 5 things to watch on the ASX 200 on Friday

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. 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 Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX 200 energy shares continue their bullish momentum today as investors continue to position themselves for a number of macroeconomic and geopolitical factors.

The S&P/ASX 200 Energy Index (ASX: XEJ), a benchmark for the sector’s performance, has jumped 0.51% from the open today. It now trades back in line with its longer-term averages and is up 30% for the year so far.

Its rise comes as the S&P/ASX 200 Index (ASX: XJO) has dropped 1.23% in early morning trading following a tough day on US markets overnight.

Whilst not restricted to Australian shares, the Betashares Global Energy Companies ETF (ASX: FUEL) has also clipped a 24.5% gain this year to date, despite a sharp pullback in June.

What’s got ASX 2000 energy shares rallying again?

Energy-based commodities are in the limelight once more as the market continues to evaluate a set of impending macroeconomic risks.

Adding to the pressure is an equally sensitive set of geopolitical factors around the US, Russian sanctions, and global oil supply.

Brent Crude oil ticked back up to US$118 per barrel overnight. It has regained support after a strong reversal this week.

Brent crude futures also regained momentum. According to Trading Economics, this happened “as traders weighed efforts by the US to include more economic powers in the G7 price cap on Russian oil, while OPEC production constraints elevated the risk of market tightness”.

Helping oil prices rise further was talk the UAE is nearing production capacity at the agreed quota with OPEC+. Meanwhile, oil-producing nation Libya is one step closer to declaring it’s unable to meet its contract obligations due to political unrest.

The price of US natural gas has also risen overnight, trading 1.25% higher at US$6.652/MMBtu.

Meanwhile, the Dutch TTF gas price has climbed 47% this past month whilst UK gas is up more than 101% year on year.

In fact, all energy markets continue to rally, with methanol the only segment posting a small 0.31% loss in the last 12 months.

What does this mean for ASX energy shares?

With oil, gasoline, heating oil, and natural gas continuing to power higher in June, this sets the scene for ASX 200 energy shares such as Woodside Energy Group Ltd (ASX: WDS), Santos Ltd (ASX: STO), and Beach Energy Ltd (ASX: BPT) to reap the benefits.

Each of these shares has posted double-digit gains in 2022, outpacing the growth of inflation by a substantial amount. All three are rallying today, as well.

At the time of writing, Woodside is trading 0.24% higher, Santos is up 0.4%, and Beach Energy is ahead 2.12%.

The surge in these markets is also set to produce some of the highest free cash flow yields for ASX 200 energy companies on record, which could translate to chunky dividends or share buybacks.

The post Why are ASX 200 energy shares surging today? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX shares today
• Own Santos shares? This analyst expects gas prices to grow through to 2025
• ASX 200 energy shares are having a ball today, what’s fuelling it?
• Here’s why the Woodside Energy share price is green all over today

Motley Fool contributor Zach Bristow 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.

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