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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.”

————

The green streak continues for ASX-listed coal shares on Thursday, with many reaching new 52-week highs.

Remarkably, the price of coal has now reached an all-time high of US$400 per tonne, representing an increase of 370% from a year ago. However, it is only in the last week that coal prices have gone vertical with the onset of Russia’s invasion of Ukraine.

The imposition of sanctions on Russia has meant many countries are now competing to find an alternative supplier. It might mean higher prices, but for ASX-listed coal shares, it could mean higher profits.

We’re going to need a whole lotta’ coal

As the Western world ramps up sanctions on Russia to deter it from further attacks on Ukraine, markets are reacting to what it could mean for commodity prices.

However, Russia’s role in the energy resource world is a big one — with it being the third-largest exporter of coal on the planet.

The reliance on Russia’s coal is pronounced across the European Union (EU). For example, Ukraine’s neighbour — Poland — draws 90% of its thermal coal supply from Russia. Yet, this hasn’t stopped Poland from urging the EU to apply sanctions on coal imports.

A blanket ban from the EU on coal from Russia has been noted as unlikely by analysts. Though, if it were to come to fruition, would likely create a burdensome gap in the region’s supply. On the other hand, this would likely be an opportunity for ASX coal shares.

According to an analysis conducted by Wood Mackenzie, Russia makes up more than 60% of thermal coal imports across the EU. In addition, the situation is worsened by the region’s requirement for high-quality coal.

Russia coal customers outside of Europe are already knocking on Australia’s door to help out with an alternative source. Yancoal Australia Ltd (ASX: YAL) CEO David Moult revealed interest from overseas customers, stating:

We are already hearing noises from a couple of our Asian customer bases like Japan and Korea and I think that will do two things, it will increase our market, but it will also underpin the current high price.

How are ASX coal shares performing?

After years of underperformance due to a strong green narrative, ASX-listed coal shares are now some of the best performers on the market.

Taking a look at how some of these companies have performed in the last year:

• Yancoal Australia: up 98%
• Whitehaven Coal Ltd (ASX: WHC): up 145%
• New Hope Corporation Limited (ASX: NHC): up 142%
• Coronado Global Resources Inc (ASX: CRN): up 92%

This signifies an outperformance of the S&P/ASX 200 Index (ASX: XJO) by more than an order of magnitude.

The post Aussie coal is in hot demand, and these ASX coal shares are booming appeared first on The Motley Fool Australia.

More reading

• Here are the 3 most heavily traded ASX 200 shares this Thursday
• 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?
• Black gold! 3 ASX energy shares pumping new 52-week highs today
• Why is everyone suddenly talking about Whitehaven Coal (ASX:WHC) shares?

Motley Fool contributor Mitchell Lawler 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 Hot Chili Ltd (ASX: HCH) share price is soaring after the miner announced an offtake agreement for its Chilean copper site.

Hot Chili is an ASX-listed copper exploration and development company operating in Chile’s Atacama Region.

At the time of writing, the Hot Chili share price is up 17% at $1.60. To compare, the broader S&P/ASX All Ordinaries Index (ASX: XAO) is up 0.74%.

So, what did the copper explorer announce?

Largest shareholder to buy 60% of copper production

Hot Chili has announced it will enter into an offtake agreement with its largest shareholder, Glencore. The agreement covers 60% of future copper concentrate production from Hot Chili’s Costa Fuego copper-gold project.

As of August last year, Glencore holds a 9.96% stake in Hot Chili.

Costa Fuego is a large-scale copper site that includes the Cortadera copper site and the Productora copper-gold project.

Chili says the site is ideal in a “low altitude, coastal range of Chile, infrastructure rich, low capital intensity” area.

The agreement will be in place for eight years and effective from the start of commercial production.

During that time, Glencore will be able to have Board representation and participate in a technical steering committee, as long as it maintains at least a 7.5% stake in Hot Chili.

What did management say?

Hot Chili managing director Christian Easterday said:

The quality of Costa Fuego continues to be externally validated with Glencore’s 2021 equity investments and the execution of this Offtake Agreement on commercially competitive terms.

We ensured project financing flexibility with 40% of our first eight years of concentrate production remaining uncommitted ahead of initiating project financing discussions in 2022, following completion of the Costa Fuego Pre-Feasibility Study.

Glencore’s expertise and support is welcomed and is an important part of our strategy to successfully transform the Company into a material copper-gold producer.

Hot Chili share price snapshot

The Hot Chili share price has seen a volatile 12 months, trickling down by 32%. In fact, the shares hit a 52-week low of $1.25 just last week.

The company has a market capitalisation of $149.77 million.

The post Heating up: Hot Chili (ASX:HCH) share price leaps 17% on new copper deal appeared first on The Motley Fool Australia.

More reading

• The Woodside (ASX:WPL) share price has smashed at least 8 52-week highs in the last month. What’s next?
• Why Morgans rates this ASX lithium share and this retail share as buys
• Santos (ASX:STO) share price rockets to a new 52-week high. Here’s why
• Top brokers name 3 ASX shares to sell today
• Could this ASX defence share be set to benefit from the Ukraine crisis?

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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While the S&P/ASX 200 Index (ASX: XJO) has had something of a rocky month, the Woodside Petroleum Limited (ASX: WPL) share price has been on fire. Over the past 4 weeks or so, Woodside shares have gained a very impressive 21.2%. That’s including the pleasing 3.45% Woodside shares have added today so far. And that monthly performance included at least 8 instances when Woodside broke its previous 52-week high.

So what’s been sparking this succession of new high watermarks?

Well, it’s likely that rising energy prices are the culprit. Commodity and energy prices have soared over the past month, largely due to the ongoing crisis in Ukraine, as well as inflationary pressures. At the start of 2022, Brent crude oil was going for under US$80 a barrel. Today, it’s well over US$100 a barrel, close to a 10-year high. What’s more, according to Bloomberg, Brent futures contracts are now pricing in Brent crude at over US$115 a barrel. 

That’s bad news for anyone filling up their car or truck at the bowser. But it happens to be very good news for an ASX 200 oil driller like Woodside.

What’s next for the Woodside share price?

So now that we’ve seen such a robust rise in the Woodside share price, many investors might be wondering how much is left in the tank, pardon the pun. Well, let’s see what an ASX broker reckons.

As my Fool colleague Tristan covered earlier this week, broker Morgans is bullish on Woodside shares. It recently rated Woodside as a ‘buy’. But its 12-month share price target was $30.35. Now when this opinion was released, Woodside shares were well below that share price. But, they have subsequently blown through it. Then again, crude oil prices have also since spiked. 

Remember, when Woodside reported its full-year earnings results last month, it revealed a realised price of $60.30 per barrel of oil equivalent compared to a unit production cost of $5.30 per barrel of oil equivalent. US$100 a barrel equates to around $137.15 on current exchange rates. So if these prices keep up, Woodside looks set for a very lucrative year indeed in 2022. 

At the current Woodside share price, this ASX 200 energy share has a market capitalisation of $30.52 billion, with a dividend yield of 5.94%. 

The post The Woodside (ASX:WPL) share price has smashed at least 8 52-week highs in the last month. What’s next? appeared first on The Motley Fool Australia.

More reading

• Are ASX green energy shares losing their appeal amid rising oil and gas prices?
• 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
• Woodside (ASX:WPL) shares are up 6% today. Here’s the lowdown

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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The team at Morgans has been very busy in recent weeks responding to results and updating their forecasts and recommendations.

Two ASX shares that came out of the process favourably are listed below. Here’s why the broker thinks they are buys now:

Allkem Ltd (ASX: AKE)

This lithium giant is held in high regard by analysts at Morgans. So much so, this week the broker retained its add rating and lifted its price target by 24% to $14.83.

Its analysts were pleased with Allkem’s update and believe that lithium prices will remain strong for some time to come. Particularly given how rising oil prices are likely to accelerate the structural shift towards electrification.

Morgans commented: “AKE is a pure play lithium producer with diversified products (spodumene, LiCO and borax) and geographies (WA and Argentina) that is set to expand. The almost completed Naraha plant will allow AKE to grow vertically into the lithium hydroxide market, supported by increased Argentinian brine production. The lithium market has seen strong price increases in CY21 but we don’t see signs of a break to this momentum yet. We expect EV demand to remain strong with geopolitical events and a potentially tight oil market accelerating the shift towards electrification.”

Lovisa Holdings Ltd (ASX: LOV)

This fashion jewellery retailer is another ASX share that Morgans rates highly. The broker currently has an add rating and $24.00 price target on its shares.

Morgans has suggested that the company could prove to be one of the biggest success stories in Australian retail. It sees a huge opportunity for Lovisa to expand internationally and appears confident that it has the management team to execute on this.

It said: LOV may just prove to be one of the biggest success stories in Australian retail. With ambitious (and financially well-incentivised) new leadership in place, we think now is the time LOV steps up to become a global force. Investment will be needed to expand LOV’s network in the US and Europe and to take it into new markets, but the returns could be stellar.”

The post Why Morgans rates this ASX lithium share and this retail share as buys appeared first on The Motley Fool Australia.

More reading

• Top broker tips another 28% upside for the Allkem (ASX: AKE) share price
• How did ASX lithium shares perform in February?
• Lithium bonanza! Broker says the Allkem (ASX:AKE) share price could double
• Top ASX shares to buy in March 2022
• 5 things to watch on the ASX 200 on Tuesday

Motley Fool contributor James Mickleboro owns Orocobre Limited. 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 Lovisa Holdings Ltd. 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 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.

---

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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