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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
• Why is everyone suddenly talking about Whitehaven Coal (ASX:WHC) shares?
• 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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The Dusk Group Ltd (ASX: DSK) share price is treading lower during early Thursday afternoon trading. This comes after the company provided an update in regards to its acquisition agreement with Eroma Group.

At the time of writing, the specialty retailer’s shares are down 2.26% to $2.60 apiece.

Dusk share price falls as company walks away from Eroma deal

ASX investors are dragging the Dusk share price lower today following the company’s latest market release.

In its announcement, Dusk advised that it will not be proceeding with the conditional agreement to purchase 100% of Eroma.

In December 2021, Dusk announced it would take over Australia’s leading supplier of candle making materials for $28 million.

Dusk stated that the total acquisition consideration would be funded through three separate sources. This included $10 million from a new debt facility, a $13 million placement, and $7 million from existing cash reserves.

However, today the company said the deal did not meet “certain conditions”. As a result, Dusk has terminated the agreement.

In a statement, Dusk management said:

The acquisition agreement was, consistent with market practice, subject to certain conditions precedent to Completion. Satisfaction of all of the conditions has not been achieved. As such, dusk will not be proceeding with the acquisition of Eroma.

The statement did not reveal any specific details as to the conditions not met.

What else is happening with Dusk?

Late last month, Dusk delivered its FY22 half-year results, which lead to its share price slipping 4.25% on the day.

Dusk reported a 12% decline in total sales to $80 million. It attributed the poor performance to government-mandated store closures. The number of store trading days was reduced by about 24% (5,483 trading days lost) in NSW, Victoria, and the ACT.

On a positive note, online sales increased by 2.8% over the prior corresponding period to $7.7 million. This growing segment accounted for 9.7% of total sales.

Dusk declared a 10 cents per share fully franked interim dividend, which based on today’s share price represents a yield of 3.85%. The shares will go ex-dividend on 11 March.

Dusk share price snapshot

It has been a disappointing 12 months for Dusk investors, with the share price falling by 13% for the period. When looking at year to date, the Dusk share price has fared worse and is down about 19%.

This is a sharp contrast from September 2021 when Dusk shares touched an all-time high of $4.07. Since then, the shares have been gradually sloping on a downhill channel.

Based on today’s share price, Dusk commands a market capitalisation of $165.63 million. There are approximately 62 million shares outstanding.

The post Here’s why the Dusk (ASX:DSK) share price is flaming out today appeared first on The Motley Fool Australia.

More reading

• Dusk (ASX:DSK) share price slumps as revenues plunge 12%

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 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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ASX retail shares have had a rough ride in 2022 so far – with Kogan.com Ltd (ASX: KGN) coming in as one of the worst performers.

The Kogan share price has slumped 31% year to date.

How the Kogan share price stacks up against its peers in 2022

Its tumble has only been bested by the share price of fellow online retailer, Temple & Webster Group Ltd (ASX: TPW), which has fallen 32%.

Other consumer goods shares, such as Adairs Ltd (ASX: ADH), Nick Scali Limited (ASX: NCK), and Accent Group Ltd (ASX: AX1) are also down – having fallen 26%, 18%, and 24% respectively in 2022.

Meanwhile, some S&P/ASX 200 Index (ASX: XJO) retailers, such as JB Hi Fi Limited (ASX: JBH) and Harvey Norman Holdings Limited (ASX: HVN) are in the green – having gained 3% and 7% respectively.

For context, the ASX 200 Index has slumped 3% in 2022.

With so many of the ASX’s favourite retailers in the red, greener things must be coming, right?

Think again dear investor. Here’s what Morgan Stanley is predicting for the retail sector’s future.

What’s next for ASX retail shares?

A recent tumble experienced by many of the most recognisable ASX retail shares might have investors dying to enter the sector.

But Morgan Stanley chief investment officer of wealth management, Lisa Shalett is warning bullish buyers to carefully consider the market.

She believes a shift in consumer spending could be heading our way, pushing spending out of goods and into services.

While that might be good news for shares in the travel, leisure, and entertainment sectors, it could harm ASX retailers.

Additionally, according to Shalett, many companies that entered the ‘stay at home’ trend saw their demand pulled forward. But that could reverse in the near future, resulting in lower demand.

Rather than looking to ASX retail shares for buys, Shalett says investors should consider those in financials, energy, materials, consumer services, and healthcare.

Such sectors seem “ripe for stock-picking ideas” she says.

The post What’s the outlook for ASX retail shares like Kogan (ASX:KGN)? appeared first on The Motley Fool Australia.

More reading

• Here are 4 ASX shares insiders are putting their money behind
• 2 cheap ASX dividend shares analysts rate as buys
• 2 great ASX shares to buy in March 2022: experts
• Top broker says Harvey Norman (ASX:HVN) share price is cheap
• These are the 10 most shorted ASX shares

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. owns and has recommended ADAIRS FPO, Kogan.com ltd, and Temple & Webster Group Ltd. The Motley Fool Australia owns and has recommended ADAIRS FPO, Harvey Norman Holdings Ltd., and Kogan.com ltd. The Motley Fool Australia has recommended Accent Group and Temple & Webster Group 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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Safety — it is one of the biggest concerns for both investors and regulators when it comes to crypto. Searching ‘is crypto safe?’ in Google returns 1.48 billion results. While a search for ‘when was Bitcoin created?’ yields 795 million results.

Despite it being 13 years since Bitcoin (CRYPTO: BTC) was created, the safety of cryptocurrency markets remains a key focus. This spurred forth a committee led by New South Wales senator, Andrew Bragg, to investigate the need for an improved regulatory framework.

Now, crypto exchanges operating in Australia could be set for a shakeup. One that is intended to create a safer environment for both consumers and the economy.

Crypto market makers to be held to a higher standard

The Bragg report distilled its findings down to 12 recommendations. Already, the government and industry participants have shown support for the new potential regulations. With the first recommendation targeting crypto markets at their core — exchanges.

Firstly, the report recommends cryptocurrency exchanges be held accountable to capital adequacy, auditing, and responsible person tests by introducing a crypto market licence regime.

In other words, exchanges would need to meet minimum standards of spare capital to reduce the risk of financial collapse. A reality all too real for customers of local exchanges myCryptoWallet and ACX. Both fell into the hands of liquidators late last year.

Bragg thinks more stringent standards for exchanges could see operators fall from over 450 to around 20 to 30. However, with tens of millions of dollars passing through these entities of the ‘Wild West’ per day, that’s a tradeoff Bragg considers justifiable.

In discussing the proposed regulations, Andrew Bragg said:

[Cryptocurrency exchanges] wouldn’t face the same level of obligation as the ASX, but a new market licensee would meet stringent tests for capital adequacy, responsible persons as well as auditing rules, control frameworks and product disclosure requirements.

Could it discourage innovation?

While senator Bragg has spoken to industry participants that are advocating for market licences, not everyone is on board. Some are concerned such new policies could stifle innovation and push it offshore.

On this topic, Kraken managing director for Australia, Jonathon Miller stated:

Australia has built a reputation for being a crypto-savvy and friendly jurisdiction which goes a long way to ensuring crypto businesses remain onshore in Australia. This is something that the ‘traditional’ technology businesses of Australia have struggled to do.

Onerous regulation such as market licensing and/or crypto-asset custody/deposit regime could risk driving these innovative businesses offshore, repeating the mistakes of the past when it comes to encouraging local innovative businesses onshore.

Despite the concerns, the Cyber Security Industry Advisory Committee is also pushing for more safeguards at the exchange and customer level.

The post Could this be set to make investing in crypto safer for Aussies? appeared first on The Motley Fool Australia.

More reading

• 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
• To infinity and beyond! Here’s why Fortescue (ASX:FMG) is spending $50m developing a brand new toy
• ASX 200 (ASX:XJO) midday update: Corp Travel Management’s ACCC boost, Zip downgraded
• IAG (ASX:IAG) share price slumps amid $300m Greensill hit

Motley Fool contributor Mitchell Lawler owns Bitcoin. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Bitcoin. The Motley Fool Australia owns and has recommended Bitcoin. 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 a healthy day in the green so far this Thursday. At the time of writing, the ASX 200 has added a robust 0.76%. But the same can’t be said of the Coles Group Ltd (ASX: COL) share price.

Coles shares are today trading at $17.13 at the time of writing. That’s down a meaty 2.67% from yesterday’s closing share price. So why are Coles shares being punished in the face of such a healthy broader market?

Well, fortunately for investors, it’s likely due to one of the only nice reasons to have a company’s share price fall. Today is the day that Coles trades ex-dividend for its upcoming interim shareholder payment.

During its half-year earnings report that was dropped back on 22 February, Coles declared an interim dividend of 33 cents per share. That will come fully franked, as is usual with this grocery giant. The 33 cents per share payment is flat on last year’s interim dividend. But it is a modest increase from Coles’ FY21 final dividend of 28 cents per share that was paid out back in September. It also represents a rise from Coles’ FY20 interim dividend of 30 cents per share. 

Coles’ interim dividend leaves its share price

When a company trades ex-dividend, it means that any new shareholders going forward are not entitled to said payment. As such, the company’s value falls because a dividend is essentially cash going out the door, never to return. That’s why we typically see a commensurate fall in a company’s share price when this happens. And that is what has happened with Coles today.

Investors can now look forward to receiving their interim dividend on 31 March later this month. In what might be a happy coincidence, Coles’ arch-rival Woolworths Group Ltd (ASX: WOW) is also going ex-dividend today, which is why we also are now seeing a fall in the Woolworths share price.

At the current Coles share price, this ASX 200 supermarket operator has a market capitalisation of $22.91 billion, with a dividend yield of 3.56%.

The post Bye bye dividend? Here’s why the Coles (ASX:COL) share price is sliding today appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Coles (ASX:COL) shares will trade ex-dividend this week. Here’s what you need to know
• These ASX dividend shares have been given buy ratings by analysts
• The oil price has just hit an 8-year high. What might this mean for ASX shares?
• These are some of the only ASX shares in the green today. Here’s why

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 owns and has recommended COLESGROUP DEF SET. 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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It’s been a dramatic week for the Zip Co Ltd (ASX: Z1P) share price. Let’s start with the pause of trading last week. Fresh from announcing a major capital raise program last Friday, Zip shares subsequently went into a trading halt.

The purpose of this capital raise is to fund Zip’s acquisition of fellow buy now, pay later (BNPL) company Sezzle Inc (ASX: SZL). This acquisition will be all-scrip. Sezzle shareholders are to receive 0.98 Zip shares for every Sezzle share they own.

Here’s how Zip co-founder and global CEO Larry Diamond justified this move when it was announced:

We are delighted to be bringing Zip and Sezzle together under a transformational transaction that is expected to deliver immediate scale and enhanced growth, which will support our path to profitability. Combining with Sezzle positions us as a leading global BNPL provider and prioritises our ability to win in the important U.S. market.

And yet, ASX investors don’t seem quite as excited as Diamond. When Zip shares resumed trading on Tuesday this week, they fell significantly. As it stands today, Zip shares have lost 13.74% in value since they resumed trading.

Brokers divided on Sezzle acquisition

Yesterday, my Fool colleague James examined some broker opinions that were positive about this tie-up. Analysts from broker Morgans described the deal as “making strategic sense” and stated that it would increase both Zip’s global transaction volumes and customer base by about 30-35%.

However, not all opinions on this merger have been positive. According to reporting in the Australian Financial Review (AFR), analysts at broker Citi reckon there might be a bit too much optimism in what Zip and Sezzle are expecting to gain from this merger.

Citi analyst Siraj Ahmed said that although Zip and Sezzle are estimating that the two companies have a 15% customer overlap, it could be closer to 25%.

He also reckons the $40-50 million in revenue synergies targeted by the companies could be optimistic. Saying that, he does see benefits in transaction margins and faster merchant additions. As well as the “introduction of Sezzle’s longer duration products”.

Analysts at Macquarie have similar concerns. They predict that bad and doubtful debts are likely to remain high and the companies will take a hit to margins due to rising interest rates.

Macquarie has a share price target of $1.85 for Zip. That’s down from $3.40 a share.

Zip share price snapshot

The Zip share price has lost a further 1.79% at the time of writing today. It is currently trading at $1.92. At this share price, the BNPL company has a market capitalisation of $1.14 billion.

The post Zip (ASX:Z1P) shares have tumbled 14% since the merger news. Top brokers offer possible reasons why appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: Corp Travel Management’s ACCC boost, Zip downgraded
• Why Domino’s, Magellan, PointsBet, and Zip shares are falling
• Top brokers name 3 ASX shares to buy today
• ‘Strategic sense’: What brokers are saying about the Zip (ASX:Z1P)-Sezzle deal
• These 3 ASX 200 shares are topping the volume charts this Tuesday

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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. owns and has recommended ZIPCOLTD FPO. The Motley Fool Australia has recommended Macquarie 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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Fortescue Metals Group Limited (ASX: FMG) is planning to spend many millions of dollars to create a new type of train.

The ASX mining giant has an important goal of decarbonising its business, as well as helping the world’s heavy industry reduce emissions as well. These efforts are coming from Fortescue Future Industries (FFI), the green division of Fortescue.

Infinity train

The acquisition of the high-performance battery business Williams Advanced Engineering (WAE) has been completed. WAE will stay “strongly independent” but it will help Fortescue decarbonise.

With the completion of the acquisition, WAE and Fortescue announced the development of an ‘Infinity Train’, which will be a world first and have zero emissions. The company has been working on decarbonising its train operations for a while now.

Fortescue explained that the regenerating battery electric iron ore train project will use gravitational energy to fully recharge its battery electric systems without any additional charging requirements for the return trip to reload.

But there are other benefits to this project as well. It will reportedly lower Fortescue’s operating costs, create maintenance efficiencies and productivity opportunities.

The company plans to become a major player in the growing global market for green industrial transport equipment as it develops and distributes this globally. The mining giant hopes this will provide “great value” for Fortescue shareholders.

How much will this cost?

Studies and development costs for the Infinity Train are expected to be US$50 million over the next two years and will be classified as operating cost efficiencies, with the studies to refine the capital estimate and schedule.

Fortescue’s current train operations

The ASX mining share currently has 54 operating locomotives that hauls 16 train sets. Each train set is around 2.8km in length and has the capacity to haul 34,404 tonnes of iron ore in 244 ore cars.

The rail operations amount to around 11% of Fortescue’s scope 1 emissions. These are emissions that Fortescue produces itself, not the emissions of its customers.

Fortescue is planning for its diesel consumption and associated emissions to be eliminated once the infinity train is fully implemented. In FY21 it used 82 million litres of diesel. The company is planning to be diesel free by 2030.

Leadership commentary

Fortescue CEO, Elizabeth Gaines, said:

The Infinity Train has the capacity to be the world’s most efficient battery electric locomotive. The regeneration of electricity on the downhill loaded sections will remove the need for the installation of renewable energy generation and recharging infrastructure, making it a capital efficient solution for eliminating diesel and emissions from our rail operations.

Fortescue share price snapshot

Over the last month, the Fortescue share price has dropped over 10%. But over the past four months it has risen by around 30%.

The post To infinity and beyond! Here’s why Fortescue (ASX:FMG) is spending $50m developing a brand new toy appeared first on The Motley Fool Australia.

More reading

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• How might the conflict in Ukraine impact the iron ore price?
• Tell him he’s dreamin’: Are the Fortescue (ASX:FMG) green hydrogen plans realistic?
• Why Betmakers, Fortescue, Suncorp, and Tyro shares are falling
• 5 ASX 200 shares trading ex-dividend today

Motley Fool contributor Tristan Harrison owns Fortescue Metals Group 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 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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