Tag: Motley Fool

ASX uranium shares have pulled back sharply on Monday following a weak open for the S&P/ASX 200 Index (ASX: XJO).

Steep declines for the uranium sector

ASX uranium shares opened to a sea of red on Monday.

The largest ASX-listed uranium player, Paladin Energy Ltd (ASX: PDN), is currently down 14.56% to 88 cents.

Energy Resources of Australia Limited (ASX: ERA) is another large uranium player, down 6.19% to 45.5 cents.

Advanced explorers such as Boss Energy Ltd (ASX: BOE) and Deep Yellow Limited (ASX: DYL) are down double digits, sinking 15.94% and 15.69% respectively.

At the smaller end of town, explorers such as Peninsula Energy Ltd (ASX: PEN), Bannerman Energy Ltd (ASX: BMN) and Vimy Resources Ltd (ASX: VMY) are also logging consistent declines, all down around 15% or more.

92 Energy Ltd (ASX: 92E) is the only ASX uranium share to tip higher, surging 28.3% to $1.025 after announcing a uranium discovery at its Gemini Project.

What’s driving ASX uranium shares lower?

ASX 200 selloff

The ASX 200 is currently down 1.55% to a 2-month low of 7,289.

From iron ore to lithium, nothing is safe with a 4.3% plunge in the S&P/ASX Materials (INDEXASX: XMJ) Index.

The weakness in both the broader market and resources sector is likely a contributing factor in the panic taking place across ASX uranium shares on Monday.

Uranium sector pulls back

The Global X Uranium ETF (NYSE: URA), which invests in a broad range of companies engaged in uranium mining and nuclear components tumbled 7.83% last Friday.

The fund’s top holdings include the world’s largest listed uranium company, Cameco Corporation, and the world’s largest producer, Kazatomprom.

Both Cameco and Kazatomprom fell sharply last Friday, down 6.53% and 4.42% respectively.

The fund also holds a number of ASX uranium shares including Paladin Energy, Boss Energy, Bannerman Energy, Deep Yellow and Peninsula Energy.

The post Why ASX uranium shares are diving double-digits on Monday appeared first on The Motley Fool Australia.

More reading

• Why the Paladin Energy (ASX:PDN) share price is down 15% on Monday
• This week’s top ASX share versus top altcoin winner revealed
• ASX uranium shares boom to multi-year highs, bull market is just getting started: analyst
• The Paladin Energy (ASX:PDN) share price rockets 5% to 9-year high. Here’s why
• 92 Energy (ASX:92E) share price jumps 11%, up 400% since IPO. Here’s why.

Motley Fool contributor Kerry Sun 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.

from The Motley Fool Australia https://ift.tt/39kc60Z

At lunch on Monday, the S&P/ASX 200 Index (ASX: XJO) has followed the lead of US markets and is tumbling notably lower. The benchmark index is currently down a disappointing 1.5% to 7,292.5 points.

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

Transurban raising funds for WestConnex acquisition

The Transurban Group (ASX: TCL) share price is in a trading halt today whilst it seeks to raise $4.2 billion. The toll road operator is raising the funds to acquire the remainder of WestConnex with the Sydney Transport Partners consortium. The $11.1 billion acquisition will take the company’s ownership to 100%.

Ausnet shares jump on takeover approach

The Ausnet Services Ltd (ASX: AST) share price is rocketing higher today after the electricity distributor received a takeover approach. According to the release, Brookfield Asset Management has made a non-binding offer to acquire all of its issued shares at $2.50 per share. This is a 26% premium to Ausnet’s closing price of $1.98 on Friday. Ausnet has decided to provide Brookfield with the opportunity to conduct due diligence.

Mining giants fall heavily

It has been another difficult day for the likes of BHP Group Ltd (ASX: BHP), Fortescue Metals Group Limited (ASX: FMG), and Rio Tinto Limited (ASX: RIO) shares. Investors have been selling down their shares again after iron ore prices tumbled further. According to Metal Bulletin, the spot benchmark iron ore price has tumbled 5% to US$101.95 a tonne.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Monday has been the Ausnet share price with an 18% gain. This follows the receipt of takeover approach from Brookfield Asset Management. The worst performer has been the Champion Iron Ltd (ASX: CIA) share price with a 12% decline. This appears to have been driven by iron ore price weakness.

The post ASX 200 (ASX:XJO) midday update: Transurban acquisition, BHP & Fortescue sink appeared first on The Motley Fool Australia.

More reading

• Fortescue (ASX:FMG) share price slides 6% as iron ore woes continue
• Ausnet (ASX:AST) share price rockets 20% on fresh takeover bid
• Why this fund manager is ditching Rio Tinto for BHP (ASX:BHP) shares
• Could the Fortescue (ASX:FMG) share price bounce back? This fund thinks so
• Transurban (ASX:TCL) share price halted for $4.2bn WestConnex equity raising

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.

from The Motley Fool Australia https://ift.tt/3tTRGFv

The ALE Property Group (ASX: LEP) share price is rocketing today, up 21% in late morning trade. And this for a company with a market cap north of $1.1 billion.

Below we take a look at the acquisition proposal that appears to be fuelling ASX investor interest.

What is Charter Hall proposing?

ALE Property’s share price is surging after reporting that Charter Hall Long WALE REIT (ASX: CLW) and a Charter Hall managed trust on behalf of Hostplus have entered into a Scheme Implementation Deed (SID) to acquire all of its shares.

The acquisition, via schemes of arrangement, remains subject to certain conditions being met. On completion, Charter Hall and Hostplus – CLW’s existing capital partner in the Long WALE Investment Partnership – would each own 50% of ALE Property’s assets.

The acquisition would see ALE investors receive $5.683 per share. That’s right at the current ALE Property share price of $5.69, up 21% from the opening bell.

Investors would receive $3.673 cash along with 0.408 Charter Hall shares for each ALE Property share they hold.

ALE Property shareholders will still receive the September quarter distribution of 5.5 cents per share without impacting on that offer.

Commenting on the acquisition, Charter Hall’s fund manager Avi Anger, said:

We believe the Transaction is attractive and designed to deliver significant benefits to both LEP and CLW securityholders. The transaction is consistent with CLW’s strategy to invest in high quality real estate assets that are predominantly leased to corporate and government tenants on long term leases.

We are pleased to be able to continue our partnership with Hostplus, a leading Australian Superannuation Fund, in investing in high quality pubs and liquor retail outlets leased to Endeavour Group.

The total value of the acquisition, including transaction costs, is estimated at $1.68 billion.

The ALE Property Board unanimously recommended shareholders vote in favour of the transaction, barring a superior offer emerging.

ALE Property share price snapshot

The ALE Property share price has gained 24% year-to-date and is up 21% today.

By comparison the All Ordinaries Index (ASX: XAO) is up 9% in 2021 and down 1% today.

The Charter Hall share price is slipping today, down just over 1%.

The post Why the ALE Property (ASX:LEP) share price is rocketing 21% today appeared first on The Motley Fool Australia.

More reading

• 2 ASX dividend shares that could be buys with yields above 5%

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.

from The Motley Fool Australia https://ift.tt/3kpecD8

The Fortescue Metals Group Ltd (ASX: FMG) is plunging yet again as iron ore prices continue their downward trajectory.

At the time of writing, the mining outfit’s shares are down 6.22% to a new 52-week low of $14.32.

What’s causing iron ore prices to fall?

It’s no secret that a slowdown in Chinese demand amid political pressure has led iron ore prices to fall.

In May, the steel-making ingredient touched a record high of US$229.50 per tonne. This translated to bumper profits for Fortescue over the period, with its shares accelerating as a result.

However, Chinese policymakers introduced rules for its steel producers in an effort to curb reliance on Australian iron ore. Chinese mills were instructed to limit 2021 output to no more than 2020 levels, or face harsh consequences.

The Asian giant wants its steel industry to hold iron ore production at around 1 billion tonnes for 2021. In the past two months, Chinese crude steel production sank 8% in July and 12% in August. Although, current levels are still up 5% year-to-date when compared against 2020, indicating further cuts in the coming months.

Fast-forward to today, the current iron ore price has dropped to US$123 per tonne, a fall of almost 14% in September.

The sharp decrease will no doubt have an impact on Fortescue’s bottom line. However, with industry-leading C1 costs of US$13.93 per wet metric tonne, the miner will still be making a profit.

Despite the latest curb in Chinese production, Fortescue is forecasting to maintain iron ore shipments for FY22. The company revealed guidance of 180 million tonnes to 185 million tonnes of iron ore.

C1 costs are expected to slightly rise to US$15.00 to US$15.50 per wet metric tonne (based on an assumed average exchange rate of AUD: USD 0.75).

About the Fortescue share price

It has been a rollercoaster ride for Fortescue investors, with the company’s shares reaching an all-time high of $26.58 in July. This quickly faded in the months following with investors offloading their shares, seeing the share price hit a 52-week low today.

Over the last 12 months, the company’s share price is down around 11%, with year-to-date down close to 40%.

Fortescue commands a market capitalisation of roughly $45 billion and has approximately 3 billion shares on its books.

The post Fortescue (ASX:FMG) share price slides 6% as iron ore woes continue appeared first on The Motley Fool Australia.

More reading

• Could the Fortescue (ASX:FMG) share price bounce back? This fund thinks so
• 5 things to watch on the ASX 200 on Monday
• Top brokers name 3 ASX shares to sell next week
• This top broker has named the Fortescue (ASX:FMG) share price as a sell
• How has the Fortescue (ASX:FMG) share price performed since reporting results?

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.

from The Motley Fool Australia https://ift.tt/3CwL2s7

The Magellan Financial Group Ltd (ASX: MFG) share price has been left bruised and battered over the past year. It began deteriorating in November and December of 2020. Unfortunately, after a momentary bounceback, shareholders have witnessed another steep fall since July this year.

On Wednesday, shares in the Aussie financial group posted a new 52-week low of $37.43. However, the Magellan share price recovered before the weekend to finish at $39.51.

What’s weighing on Magellan shares?

The recent cascade in the Magellan share price comes as concerns mount over the financial group’s underperformance while retaining relatively high fees.

For example, the Magellan Global Fund (ASX: MGF) has returned 12.77% since its inception (in November 2020). However, the fund’s MSCI World benchmark index delivered a 23.58% windfall over the same period. As a result, the global investment strategy led by billionaire fund manager Hamish Douglass has underperformed by 10.81%.

This underperformance is largely due to the heavier weighting towards China-based companies in the Magellan fund. According to the fund, Alibaba Group Holding Ltd (NYSE: BABA) and Tencent Holdings Ltd (HKG: 0700) made up 4.8% and 4.5% of the Global fund’s holdings at the end of June.

Both companies have slumped more than 25% in the past 6 months as China’s government cracks down on various industries with regulatory changes.

To make matters worse for the Magellan share price, the investment manager’s growth in total funds under management slowed month over month in August. Compared to previous months, with posted increases of around 3.5%, August experienced a marginal gain of 0.8% to $117.96 billion.

What do analysts think?

Three analysts have shared less than optimistic perspectives on the Magellan share price recently. Firstly, analysts at UBS cut its price target to $35 per share with a “sell” rating, down from a neutral. This would suggest at least a further 10% downside to the current Magellan share price.

Secondly, the team at Jarden has downgraded its outlook on Magellan shares to “underweight”. Finally, leading broker Morgan Stanley has held an “underweight” rating on Magellan since August.

The post What’s going wrong for the Magellan (ASX:MFG) share price lately? appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to sell next week
• The Magellan (ASX:MFG) share price hit a 52-week low this week. Do brokers think it’s a buy?
• Why the Magellan Financial (ASX:MFG) share price is down 21% in a month
• Magellan (ASX:MFG) share price slumps on FUM update
• 2 ASX dividend shares that could be buys in September 2021

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.

from The Motley Fool Australia https://ift.tt/3nRWQAW

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.

Consumer product and technology company Apple (NASDAQ: AAPL) is one of the largest and most dominant businesses globally, since building a base of more than 1 billion iPhone users worldwide.

Apple just had its annual iPhone reveal event and again showcased incremental product updates rather than something bolder. While it’s still a great company, here are three reasons why Apple stock’s best returns might be behind it.

1. Apple and the “Innovator’s Dilemma”

The “Innovator’s Dilemma” concept comes from Harvard professor Clayton Christensen, who wrote a book about it in 1997. The Innovator’s Dilemma is the idea that a successful business can get caught between sustaining what it knows already works versus striving to continue pushing the envelope, embracing new ideas.

A classic example of this is Blockbuster, which went from a multi-billion-dollar industry giant in entertainment to out of business in just over a decade because it failed to adapt its business model to new and emerging ideas, which in this case was the digital distribution of content, a la Netflix.

When we talk about Apple, it’s essential to be clear in saying that I do not think Apple is in danger of being “Blockbustered.” But it is important to recognize patterns and be forward-looking.

Apple just had its annual iPhone reveal, and the majority of the highlights centered around new iterations of its iPhone, Apple Watch, and iPad products. The freshest product among these three is the Watch, which debuted in 2015. Apple has added the occasional feature over the past six years but has mostly stuck with memory, processor, and camera upgrades.

Why would Apple shake things up? The iPhone continues to sell, and Apple has grown revenue by 15% per year over the past decade. But in 2010, more than one-third of Americans used Blackberry devices; did anyone see the iPhone coming then?

2. The “law of large numbers”

Apple has grown into the largest public company globally, with a market cap currently at $2.4 trillion. The total Gross Domestic Product (GDP), which is the total monetary value of all the goods and services in the United States economy, is $22.72 trillion, meaning Apple is worth more than 10% of the wealthiest economy in the world!

I know we’re comparing apples and oranges here since market caps measure the total market value of a company while the GDP looks at monetary production in a single year. Nevertheless, it’s still impressive to see Apple’s market value in the same ballpark as this metric of the national economy.

The stock’s market cap has grown from roughly $400 billion to $2.4 trillion over the past decade, a six-fold increase. Because Apple is such a massive company, it will be much harder for the market cap to double, let alone grow six-fold again anytime soon.

It’s just what happens when a company reaches a large enough size. A smaller company will grow from $5 billion to $50 billion more easily than a $100 billion company will grow to $1 trillion. Apple can continue to grow and increase in value, but investors are unlikely to see the returns over the next decade that just occurred over the last 10 years.

3. A valuation going in the wrong direction

To drive this point home, let’s look at Apple’s valuation over that time. From 2012 to late 2019, the stock consistently traded at a price-to-sales (P/S) ratio between 2 and 4. But since then, the P/S ratio has expanded to what is now more than 7.

Can Apple justify this increased valuation as its massive size makes it increasingly harder to maintain its growth? It has been working to grow a variety of subscription services in recent years, such as:

• Apple Music
• Apple TV+
• Apple Arcade
• iCloud
• Apple Fitness+

These services carry higher gross margins than the hardware Apple sells. In third-quarter 2021, service margins were 70% versus 36% on hardware. However, services make up just 18% of total revenue, so the company’s overall profit margins might be tough to improve dramatically because hardware influences the total financials so much.

So what can investors expect from Apple?

The business itself remains healthy, and investors should not interpret this as a negative slant on the company. Apple continues to grow; its revenue grew 36% year over year in the 2021 third quarter, hitting an all-time high.

Apple may need to continue performing at a high level to justify its increased P/S ratio; if sales momentum slows from something like a soft iPhone sales cycle, investors may choose to push the stock back toward the valuation it’s traded at for much of the past decade.

With how large the company has grown, investors are most at risk of Apple becoming merely a “good” investment moving forward instead of the “great,” life-changing investment it has been for the past two decades.

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

The post Apple and the innovator’s dilemma appeared first on The Motley Fool Australia.

More reading

• Apple’s App Store case: What investors need to know
• Apple’s epic loss could be a big win for Spotify
• Why I’m holding my Afterpay (ASX:APT) shares: expert
• Here were the most popular US shares for ASX investors last week
• Leading broker unmasks 4 top traded international shares

Justin Pope has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Apple and Netflix. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended BlackBerry and 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 recommended Apple, BlackBerry, and Netflix. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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

from The Motley Fool Australia https://ift.tt/3hNVBz7

The REA Group Limited (ASX: REA) share price is falling today despite the company’s CEO, Owen Wilson, declaring that financial year 2021 (FY21) was a “defining period” for the company.

Wilson’s comments were released with the company’s annual report this morning.

Within the report, Wilson noted the changes the company’s realestate.com.au platform made to support Australians in lockdown, which saw it sport its highest ever customer sentiment rating. Additionally, he named the company’s FY21 results “exceptional”, despite the “extraordinary disruption” caused by COVID-19.

Right now, the REA share price is $155.33, 1.27% lower than its previous close.

Let’s take a closer look at how the company’s leaders viewed its performance over the 12-months ended 30 June 2021.

REA’s “outstanding” FY21

The REA share price is in the red this morning despite the release of the company’s latest annual report.

Within the report, REA’s CEO celebrated a strong yearly performance, as did its chair, Hamish McLennan.

McLennan commented the digital advertising company specialising in property had an “outstanding” FY21 despite “ongoing disruptions and volatility” from the pandemic.

REA’s realestate.com.au saw more than 3 times more visits than its nearest competitor in FY21. REA also launched a number of new services with its Australian offerings and extended the company’s international footprint.

REA also increased its shareholding in India’s Elara to 54.3%, while Elara’s flagship site Housing.com saw 92% more site visits than it did in the previous financial year.

Additionally, REA transferred its Malaysia and Thailand operations to PropertyGuru in exchange for an 18% interest in PropertyGuru.

Back home, REA acquired Mortgage Choice, bringing it together with the company’s Smartline broker business. McLennan stated the acquisition will accelerate REA’s financial services strategy and potentially see it become Australia’s leading mortgage broking business.

However, none of the acquisition news posed by REA in FY21 resulted in its share price increasing.

Though, its business’ growth wasn’t all the company achieved last financial year.

REA officially became carbon neutral in FY21, completing the Australian Government’s Climate Active certification process.

The company’s MSCI ESG rating also increased from ‘BBB’ to ‘A’. For those not familiar with MSCI’s ESG ratings, they measure a company’s ability to weather long-term environmental, social and governance (ESG) risks. A rating of ‘A’ puts a company at the high end of average, with ‘AA’ and ‘AAA’ indicating a leading ESG company.

Further, REA ended FY21 with a gender-balanced leadership team and equal gender representation within its Australian employees.

REA share price snapshot

The REA share price has been struggling on the ASX in 2021.

It has only gained 0.7% this year so far.

However, it is 44.1% higher than it was this time last year.

The post REA Group (ASX:REA) share price slumps amid CEO naming FY21 a “defining period” appeared first on The Motley Fool Australia.

More reading

• 2 excellent ASX growth shares named as buys
• 3 ASX 200 (ASX:XJO) growth shares to buy
• 3 excellent ASX 200 (ASX:XJO) shares worth a closer look
• 2 fantastic blue chip ASX 200 (ASX:XJO) shares to buy in September
• How to turn $20,000 into $475,000 in 10 years with 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. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3zlSFiV

The Vulcan Energy Resources Ltd (ASX: VUL) share price is out of form on Monday.

In morning trade, the clean lithium company’s shares are down 4% to $14.52.

This is despite the company releasing an update on some key new appointments today.

Why is the Vulcan share price tumbling lower?

Today’s decline by the Vulcan share price appears to have been driven by broad weakness in the lithium sector.

This may be due to profit taking after some strong sector gains in recent weeks.

For example, the Vulcan share price isn’t the only one sinking today. The Orocobre Limited (ASX: ORE) share price is down 5% and the Pilbara Minerals Ltd (ASX: PLS) share price is down 6% at the time of writing.

What about the announcement?

Failing to give the Vulcan share price a lift today was the announcement of some key new appointments in its communications team.

In Germany, Vulcan has appointed Beate Holzwarth as its Chief Communications Officer, effective from 1 October.

The release notes that Mrs Holzwarth has over 20 years’ experience in various communication and marketing roles within Mercedes-Benz Cars and Daimler Trucks.

Whereas in Australia, Vulcan has appointed Jessica Bukowski as its Public and Investor Relations Manager. Ms. Bukowski was previously Senior Media and Corporate Affairs Specialist at Fortescue Metals Group Limited (ASX: FMG). She was also an adviser to former Prime Minister Kevin Rudd AC.

Vulcan’s Managing Director, Dr Francis Wedin, commented: “With Beate and Jess joining us, we welcome two highly qualified and capable communications experts into our executive team. Beate’s experience in the German automotive industry with Daimler-Mercedes and her in-depth knowledge of the Upper Rhine Valley region, combined with Jess’ experience with the transformation of Fortescue towards becoming an integrated resources-renewable energy company, will be invaluable to our stakeholder communication as part of the development of the Zero Carbon Lithium Project.”

The post Vulcan (ASX:VUL) share price tumbles despite key appointments appeared first on The Motley Fool Australia.

More reading

• Top broker gives its verdict on the Orocobre (ASX:ORE) share price
• Why Afterpay, AnteoTech, Cettire, & Vulcan shares are storming higher
• Why Accent, Ioneer, Lifestyle Communities, & Vulcan are sinking
• Which ASX shares are leading the way on the ASX 300?
• Why the Vulcan (ASX:VUL) share price is crashing 10% today

Motley Fool contributor James Mickleboro owns shares of 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 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.

from The Motley Fool Australia https://ift.tt/3lGQBgM

The Paladin Energy Ltd (ASX: PDN) share price has been booming double digits almost every other day since late August thanks to skyrocketing uranium prices.

However, its shares are unwinding on Monday, down 13.59% to 89 cents at the time of writing.

What’s driving the Paladin Energy share price?

Broader market selloff

Wall Street was red across the board last Friday, with the Dow Jones Industrial Average, Nasdaq and S&P 500 down between 0.48% and 0.91%.

The S&P/ASX 200 Index (ASX: XJO) has followed suit, down 1.2% to a 2-month low of 7,314.90.

Headlining today’s selloff is the resources sector, with heavyweights BHP Group Ltd (ASX: BHP), Fortescue Metals Group Ltd (ASX: FMG) and Rio Tinto Limited (ASX: RIO) opening lower.

The S&P/ASX Materials (INDEXASX: XMJ) is currently down 2.78%, which doesn’t spell good news for the Paladin Energy share price.

Uranium cools off

The uranium sector has been running hot since late August after spot prices jumped from US$30/lb to 9-year highs of around US$50/lb.

Even after today’s selloff, the Paladin Energy share price is up more than 100% since 20 August.

Coinciding with the market’s broader weakness on Friday night, the Global X Uranium ETF (NYSE: URA) tumbled 7.83%.

The uranium ETF provides a good reflection of how the sector is performing, given its broad exposure to uranium mining and nuclear components.

Are uranium prices still booming?

Uranium prices managed to close around US$50/lb on Friday.

The recent jump in uranium has largely been driven by Sprott Inc’s Physical Uranium Trust. The fund has been aggressively buying physical uranium off the spot market, tightening the market and driving prices higher.

The fund continued snapping up uranium last Friday, according to its Twitter account.

What a month for the Sprott Physical Uranium Trust!

Over 10 million pounds of physical #uranium added since August 17!

Now over 28 million lbs held #SPUT $U.UN $U.U $SRUUF #Nuclear #lowcarbon

For more information and disclosures, please visit https://t.co/PcaG53VfN5 pic.twitter.com/NeV2qQPxXE

— Sprott Asset Management (@Sprott) September 17, 2021

https://platform.twitter.com/widgets.js

Overall, it looks like uranium prices have held steady which spells good news for the broader uranium sector.

However, it looks like the crumbling ASX 200 and resources sector might have other plans for the Paladin Energy share price.

The post Why the Paladin Energy (ASX:PDN) share price is down 15% on Monday appeared first on The Motley Fool Australia.

More reading

• ASX uranium shares boom to multi-year highs, bull market is just getting started: analyst
• The Paladin Energy (ASX:PDN) share price rockets 5% to 9-year high. Here’s why
• Is there a uranium ETF listed on the ASX?
• Why are ASX uranium shares in focus today?
• Which ASX 300 shares are on the move mid-week?

Motley Fool contributor Kerry Sun 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.

from The Motley Fool Australia https://ift.tt/3lI0hHE

The Nickel Mines Ltd (ASX: NIC) share price has started the week deep in the red.

In morning trade, the nickel producer’s shares have fallen 6% to $1.01.

Why is the Nickel Mines share price sinking?

The Nickel Mines share price has come under pressure today amid concerns that the company could be negatively impacted by tax changes in Indonesia.

An announcement notes that on Friday, the Indonesian Investment Minister was reported as suggesting that Indonesia is exploring the possibility of levying an export tax on nickel products with less than 70% nickel content.

However, it also highlights that the reported comments were made without prior consultation with other Indonesian Government Ministries. This includes the ministry which would be responsible for the introduction of such a tax, the Ministry of Energy and Natural Resources (MEMR).

Furthermore, it points out that any contemplated export tax must be submitted in draft to the Cabinet Secretary for review and eventual Presidential approval before it can be finalised and issued by the relevant Minister.

As a result, the proposal would be required to follow this process, and only after a lengthy period of discussion and industry consultation.

Though, based on the Nickel Mines share price, it seems that some investors believe the changes could happen and weigh on its margins.

Management commentary

Nickel Mines’ Managing Director Justin Werner doesn’t appear overly concerned with the speculation.

Particularly given the company’s strong domestic sales and its ability to create product with nickel content greater than 70%.

He said: “Whilst we do not currently believe the rumoured export tax to be the planned policy of the Government, it is worth noting that at present, approximately 50% of the Company’s NPI production is sold within the IMIP (in-country).”

“The Company also has an MoU for two of its RKEF lines to undergo conversion to allow the production of nickel matte which can be processed within the IMIP to a grade of greater than 75%. The Company expects to enjoy an exceptionally strong 2H2021 on the back of record NPI prices and strengthening EBITDA margins,” he added.

The post Why the Nickel Mines (ASX:NIC) share price is sinking 6% today appeared first on The Motley Fool Australia.

More reading

• These were the best performing ASX 200 (ASX:XJO) shares last week
• Here are the top 10 ASX 200 shares on Friday
• Why the Nickel Mines (ASX:NIC) share price is leaping 8% on Friday

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.

from The Motley Fool Australia https://ift.tt/3lEhu51