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Investors have been understandably hesitant when it comes to S&P/ASX 200 Index (ASX: XJO) banks of late.

But legendary investor Warren Buffett has some handy tips for allaying those fears before investing in the sector.

Global bank stocks have been roiled in recent weeks, commencing with the collapse of United States-based Silicon Valley Bank and subsequently Signature Bank.

Regional banks in the US remain under pressure, as the crisis has spread to Europe.

Credit Suisse was the first victim there. The venerable bank was taken over by UBS in a desperate deal engineered by the Swiss government to stave off its collapse. Other European banks, including Deutsche Bank, have also come under pressure.

So, are ASX 200 banks any different?

Here are three tips from Warren Buffett to keep in mind when researching the sector.

Three Warren Buffett tips on how to invest in ASX 200 banks

First, before Warren Buffett invests in any bank stock, he carries out thorough research to ensure it has a good margin of safety. Buying a stock, the Oracle of Omaha says, is just like buying an entire business.

So do your homework!

When it comes to ASX 200 bank shares, you want to make sure they’re resilient to any potential liquidity crunch, like those that are rocking some banks in the US and Europe.

The good news here is that the big four ASX 200 banks are reported to be in the strongest shape of any in the world, in terms of their Common Equity Tier 1 (CET1) ratio.

CET1, if you’re not familiar, measures the core equity capital of a bank in comparison to its risk-weighted assets.

The Australian Prudential Regulation Authority (APRA) requires the ASX 200 banks to have a minimum 10.25% CET1 ratio. And all of the big four banks handily exceed that level.

Speaking at The Australian Financial Review Banking Summit, APRA chair John Lonsdale said, “Australians can be confident of two things: their banking system is among the strongest and most resilient in the world, with prudential safeguards above and beyond minimum international requirements.”

The second Warren Buffett tip for investing in ASX 200 banks is to look for economic moats.

Just like a moat protects a castle, these are companies with existing competitive advantages that make it more difficult for newcomers to come in and steal their businesses. The sheer size of the big four banks and their broad lending reach gives them all solid moats.

Finally, don’t expect to double your money overnight.

Warren Buffett recommends investing for the long term.

ASX 200 banks may not be immune to any short-term jitters surrounding the global banking industry.

But with world-leading capital positions and lengthy track records of regular dividend payouts, patient investors who’ve done their due diligence should reap the rewards in good time.

How have the big banks been tracking?

Here’s how the big four ASX 200 banks have performed over the past six months:

• Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares are up 2.8%
• National Australia Bank Ltd (ASX: NAB) shares are down 2.9%
• Westpac Banking Corp (ASX: WBC) shares are up 6.5%
• Commonwealth Bank of Australia (ASX: CBA) shares are up 10.2%

The post 3 Warren Buffett tips on how to invest in ASX 200 banks appeared first on The Motley Fool Australia.

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More reading

• Buy these ASX 200 shares for massive dividends: analysts
• Top ASX dividend shares to buy in April 2023
• Why was the Westpac share price sold off in March?
• Why did the ANZ share price crash 7% in March?
• Why did the NAB share price tank more than 7% in March?

Motley Fool contributor Bernd Struben 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 Westpac Banking. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 300 Index (ASX: XKO) and ASX shares are having a stellar start to the trading week so far this Monday. At the time of writing, the ASX 300 is up a healthy 0.78% at just under 7,190 points. So as an index fund covering the ASX 300, by all accounts, the Vanguard Australian Shares Index ETF (ASX: VAS) should be doing something similar.

Yet this ASX exchange-traded fund (ETF) is barely up today. Vanguard Australian Share ETF units closed at $89.78 each last Friday. But today, this ETF is only up by a seemingly paltry 0.29% at $90.04. Index funds like the Vanguard Australian Shares ETF are supposed to mirror the index they track. So this is a rather strange diversion.

Thankfully, this ETF isn’t broken, and neither is the share market. And in fact, investors should be grateful that Vanguard Australian Shares ETF units are in the green at all. This situation is occurring because it is ex-dividend day for the Vanguard Australian Shares ETF. Or more accurately, ex-distribution day.

Vanguard Australian Shares ETF doles out its latest dividend

Just like ASX shares, ETFs can pay out dividends too. These are known as distributions, and occur because an ETF that holds dividend-paying shares in its portfolio has to pass those dividends through to their investors.

In the Vanguard Australian Shares ETF’s case, it owns the 300 largest shares by market capitalisation on the share market. That’s everything from Westpac Banking Corp (ASX: WBC) and Rio Tinto Limited (ASX: RIO) to Xero Limited (ASX: XRO) and Lovisa Holdings Ltd (ASX: LOV).

So there are a lot of dividends to pass on here. As such, this ETF usually pays out quarterly dividend distributions. And the latest one is coming to investors soon.

Late last month, Vanguard announced that the Australian Shares ETF’s latest distribution would be paid on 20 April, with an ex-distribution date of 3 April.

Later, the provider confirmed that this distribution would be worth 57.6988 cents per unit. This is the lowest quarterly distribution that this ETF has paid out since July 2021. For context, last year’s corresponding quarterly payment was worth 199.59 cents per unit. The previous quarterly payment that was doled out in January this year was worth 74.97 cents per unit.

So as of today, new investors in the Vanguard Australian Shares ETF are not eligible for this upcoming dividend distribution. As such, this explains why the ETF isn’t matching the market’s gains and appears to be underperforming.

The post Why is the Vanguard Australian Shares Index ETF (VAS) tumbling on Monday? appeared first on The Motley Fool Australia.

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More reading

• Here are the ASX shares I was buying and selling in March
• Hoping to bag the next Vanguard Australian Shares Index ETF dividend? You’d better hurry
• No savings? Drip-feed $500 a month into ASX shares and aim to retire in comfort
• How much do I need to invest in ASX shares for $100 in weekly passive income?
• Does the fall in the Vanguard Australian Shares Index ETF share price make it a no-brainer buy?

Motley Fool contributor Sebastian Bowen has positions in Vanguard Australian Shares Index ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The team at Morgans regularly picks out its best ASX share ideas. These are the ASX shares that the broker thinks offer the highest risk-adjusted returns over a 12-month timeframe and are supported by a higher-than-average level of confidence.

Among its best ideas for April are the three ASX shares listed below. Here’s what the broker is saying about them:

CSL Limited (ASX: CSL)

This biotherapeutics company remains a key pick for Morgans. Its analysts believe that CSL’s outlook has improved materially since the height of the pandemic and are forecasting solid earnings growth in the coming years. The broker commented:

A key portfolio holding and key sector pick, we believe CSL is poised to break-out this year, a COVID exit trade, offering double-digit recovery in earnings growth as plasma collections increase, new products get approved and influenza vaccine uptake increases around ongoing concerns about respiratory viruses, with shares offering good value trading around its long-term forward multiple of ~30x.

Morgans has an add rating and $337.92 price target on CSL’s shares.

Seek Ltd (ASX: SEK)

Another ASX share on Morgans’ best ideas list this month is job listings giant Seek. The broker believes it is the best classifieds company to buy right now thanks to a number of tailwinds. It explained:

Of the classifieds players, we continue to see SEEK as the one with the most relative upside, a view that’s based on the sustained listings growth we’ve seen over the period. The tailwinds that have driven elevated job ads (~210k currently, broadly flat on the robust pcp) and strong FY22 result appear to still remain in place, i.e. subdued migration, candidate scarcity and the drive for greater employee flexibility. With businesses looking to grow headcount in the coming months and job mobility at historically high levels according to the RBA, we see these favourable operating conditions driving increased reliance on SEEK’s products.

The broker has an add and $28.40 price target on Seek’s shares.

The post Morgans names the best ASX shares to buy in April appeared first on The Motley Fool Australia.

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More reading

• This ASX share’s halved in 5 years, but I’m still sticking with it
• This ASX 200 giant is about to wake up from a 3-year slumber. Are you ready?
• Fundie loves these 2 ASX 200 shares that are ‘difficult to replicate’
• Does the CSL share price fall finally make it a no-brainer buy?
• Why these 3 ASX 200 shares could be leading picks for dividends and growth

Motley Fool contributor James Mickleboro has positions in CSL and Seek. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has recommended Seek. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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We seem to be enjoying yet another positive day on the ASX share market this Monday. After last week’s five-for-five gains, the S&P/ASX 200 Index (ASX: XJO) is pushing higher again today, currently up by a healthy 0.83% at back over 7,230 points. It’s also a good day for AMP Ltd (ASX: AMP) shareholders too, thanks to some dividend news. 

AMP shares are on fire today. The ASX 200 financial services veteran closed at $1.05 a share last week. But today, the AMP share price has boomed by an impressive 4.3% up to $1.10 a share.

This gain might just be some rubber banding going on. On Friday last week, a day when the ASX 200 jumped convincingly, the AMP share price cratered by a nasty 2.78%. This was probably thanks to the news that AMP shareholders rejected the company’s remuneration report at the annual general meeting.

Today, all seems forgotten:

But this 4.3% rise comes on top of some good news regarding AMP’s latest dividend. To sum it up, today is AMP’s dividend payday.

AMP shareholders are about to get a dividend payday

Yes, it’s been quite a while since investors were treated to a dividend from AMP shares. In fact, the company’s last dividend payment came over four years ago, back in 2019.

But when AMP announced its latest full-year earnings to the markets back in February, it included a final dividend of 2.5 cents per share, partially franked at 20%. That was despite the company reporting a 34% drop in underlying net profits after tax (NPAT) to $184 million.

So this new dividend is arriving in eligible shareholders’ bank accounts today. That’s after the company traded ex-dividend back on 1 March. Any investors who bought AMP shares on or after that date will miss out on this latest dividend.

But for anyone who owned the shares before that date, today is your day. AMP also has a dividend reinvestment plan (DRP) in place for this dividend, so for shareholders who opted for the DRP, today is the day you will be issued your additional shares. 

AMP has turned its focus to rewarding long-suffering shareholders this year. In addition to its first dividend in four years, AMP is also in the midst of conducting a $350 million share buyback program as well.

Today’s 2.5 cents per share dividend now gives the AMP share price a dividend yield of 2.27%.             

The post The first AMP dividend in over 4 years is being paid today. Here’s the lowdown appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• AMP share price slips amid expected first strike on remuneration
• Here are the top 10 ASX 200 shares today
• Sunk $3,000 into AMP shares 5 years ago? Here’s how much passive income you’ve realised
• Are AMP shares set to become a dividend machine?

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 Scott Phillips.

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S&P/ASX 200 Index (ASX: XJO) shares are marching higher on Monday, with the benchmark index up 0.77% in morning trade.

This comes as investors await the next interest rate decision from the Reserve Bank of Australia (RBA).

The RBA makes its announcement at 2:30pm AEST time tomorrow.

What’s happening with rate hikes and ASX 200 shares?

In its ongoing battle to tame hot-running inflation, the RBA has raised the official cash rate at each of its past 10 meetings.

On 7 March, the central bank increased interest rates by another 0.25%, bringing the current official cash rate to 3.6%. That’s up from the historic low of 0.1% when the bank first started tightening in May last year.

As last month’s rate hike was widely expected, ASX 200 shares actually leapt 0.6% right after the RBA’s announcement.

Tomorrow’s price action will be interesting to watch, as the market is more divided on whether to expect another rate hike or if the time has come for a pause.

With inflation easing, consumer spending slipping, and a large number of home loans coming off ultra-low fixed rates, a number of economists believe the RBA will hold off with any further rate increases. That would likely see a relief rally in ASX 200 shares.

But there’s far from a consensus agreement on that view. Inflation of 6.8% remains far above the RBA’s 2% to 3% target range and unemployment levels remain at historic lows of 3.5%, which could force the RBA’s hand.

With that in mind…

What the experts are saying

With ASX 200 shares potentially facing headwinds or tailwinds from tomorrow’s RBA decision, we turn to Bloomberg’s economist survey for some greater insight.

Of the 30 surveyed economists, 19 said they believe the RBA will hold fire tomorrow while 11 believe ASX 200 share investors should be prepared for another 0.25% rate hike.

This comes after both the US Federal Reserve and the European Central Bank opted to raise rates at their last meetings, despite the ongoing banking crisis. Notably, the Royal Bank of Canada went the other way and paused its tightening cycle at the last meeting.

Among the economists forecasting a pause is Gareth Aird, head of Australia economics at CBA.

“The domestic economy is now showing sufficient signs of slowing and we expect the RBA board will judge that a pause in the tightening cycle is the appropriate move,” Aird said (quoted by Bloomberg). “The RBA does not want a recession.”

But chief Australia economist at Goldman Sachs Andrew Boak begs to differ and forecasts a 0.25% increase is on the cards for tomorrow.

“Australian inflation is far too high, with clearer signs of an acceleration from persistent sources in the services sector,” Boak said. He noted that the Fed has “continued to hike rates through a period of much more intense market volatility“, and he expects the RBA to follow suit.

That gives you some idea of the immediate outlook for a rate hike or pause.

As for any rate cuts ahead that may help boost ASX 200 shares, most experts believe that’s a good way off yet.

“The lagging nature of wages growth, another likely high minimum wage increase and upside risk to public sector wages following the change of government in NSW suggest that [a rate cut] is unlikely in 2023 or early 2024,” said Su-Lin Ong at RBC Capital Markets (courtesy of The Australia Financial Review).

“We expect the RBA to delay policy easing to the third quarter of 2024 – by which time we expect trimmed mean inflation to have (finally) returned to the target band,” Goldman’s Boak added.

What do you think, Bernd?

As this economist is still awaiting the survey call from Bloomberg, I’m glad you asked!

I’m going to split the difference on this one. I believe ASX 200 share investors should expect a rate increase, but a small one.

My forecast is for the RBA to lift rates by 0.15%, bringing the official cash rate to 3.75%. Then perhaps next month we can look forward to a pause.

The post Investing in ASX 200 shares? Here’s what to expect from the RBA tomorrow appeared first on The Motley Fool Australia.

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More reading

• The first AMP dividend in over 4 years is being paid today. Here’s the lowdown
• What on earth happened to the Core Lithium share price in March?
• A director has been buying up BHP shares. Should you?
• Buying South32 shares for the dividends? Read this first
• Electro Optic Systems share price rockets 53% on Ukraine deal

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Despite rebounding strongly late in the month, the Core Lithium Ltd (ASX: CXO) share price still recorded another disappointing decline in March.

The lithium developer’s shares lost 7.5% of their value during the period to end at 86 cents.

Though, it could have been far worse had it not been for that aforementioned rebound, which was caused by a rival receiving a takeover offer at a significant premium.

For example, at one stage in March, the Core Lithium share price was down to a 52-week low of 73 cents. If it has finished the month there, it would have meant a decline of almost 22% for the period.

Why did the Core Lithium share price tumble in March?

Investors were hitting the sell button in the lithium industry for much of last month after spot prices of the battery making ingredient continued to fall.

This sparked fears that many lithium developers have missed the boat on sky high prices and led to investors questioning their valuations.

Not even a mineral resource update and new sales agreement were enough to stop the Core Lithium share price from falling last month.

The former revealed the more than doubling of the mineral resource estimate at BP33 from 4.37Mt @ 1.53% Li2O to 10.1Mt @ 1.48% Li2O. Whereas the latter confirmed that the company has agreed to an additional sale of spodumene concentrate to long-term customer Sichuan Yahua.

Is this weakness a buying opportunity?

Opinion remains divided on where the Core Lithium share price is heading from here.

Analysts at Macquarie are bullish and have an outperform rating and $1.10 price target on its shares. Whereas over at Citi, its analysts have a sell rating and 75 cents price target on them.

Time will tell which broker makes the right call.

The post What on earth happened to the Core Lithium share price in March? appeared first on The Motley Fool Australia.

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• These are the 10 most shorted ASX shares this week
• These ASX 200 lithium shares could be takeover targets: Morgans
• Which ASX 200 lithium share has been a 10-bagger in two years?
• Attention lithium investors: This ASX 200 mining billionaire says Australia could become a battery chemical manufacturing powerhouse
• Short interest in Core Lithium shares is growing. Is this a red flag?

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 Scott Phillips.

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BHP Group Ltd (ASX: BHP) director Gary Goldberg bolstered his stake in the S&P/ASX 200 Index (ASX: XJO) giant last week. The purchase has likely left market watchers wondering if the insider is expecting big things from the iron ore monolith.

Further, some might question whether the insider transaction signals that now is a good time to buy BHP shares. So, with that, let’s take a look at what analysts are expecting from the stock.

The BHP share price is $47.07 at the time of writing – 0.34% lower than its previous close.

For comparison, the ASX 200 is lifting 0.95% right now.

Is now a good time to invest in ASX 200 iron ore giant BHP?

Director Goldberg forked out more than US$58,000 to buy 1,000 BHP American depositary shares (ADS) – equivalent to 2,000 BHP shares – on market for around US$58.37 each last week.

That represents a total spend of approximately $87,500, or $43.77 per ASX share, based on the current exchange rate.

Top broker Macquarie is likely to herald the buy as a bargain. It has an outperform rating and a $52 price target on BHP shares, my Fool colleague James reports. That marks a potential 10% upside on the stock’s current price.

Macquarie thinks the company’s cash flow could be set to benefit from strong iron ore, coking coal, and copper prices in the years to come.

But not all experts are so bullish. Sequoia Wealth Management senior wealth manager Peter Day tips the stock a sell saying, courtesy of The Bull:

China’s recovery may be driven by consumption rather than construction. Consequently, we’re cautious about the outlook for iron ore – at least in the short term.

Also, growth in scrap steel and China’s decarbonisation agenda may impact demand for steel over the medium term.

Much of the company’s income comes from iron ore sales. Thus, its earnings could suffer if the price of the commodity were to slump.

Day also highlighted the ASX 200 giant’s recent first-half results, wherein it recorded a 32% fall in profit after tax, coming in at US$6,457 million.  

BHP share price snapshot

The BHP share price has outperformed in line with the ASX 200 so far this year.

Both the stock and the index have gained 4% year to date.

Looking longer term, however, the iron ore giant’s share price has crashed 10% over the last 12 months. That’s compared to the ASX 200’s 4% dip.

The post A director has been buying up BHP shares. Should you? appeared first on The Motley Fool Australia.

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More reading

• 2 ASX 200 mining directors buying up their company shares in the past week
• Why did the BHP share price see-saw in March?
• Why did the BHP share price have such a top run today?
• ASX shares are paying out $19 billion in dividends this week. Are you getting a piece?
• The trimmed-down BHP dividend will be paid today. What’s next?

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

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South32 Ltd (ASX: S32) shares have been through plenty of volatility over the past two years. But, could investors be comforted by the fact that the business sometimes pays larger dividends?

For readers that don’t know what South32 does, it’s a very diversified global mining business. It produces a number of commodities including bauxite, alumina, aluminium, copper, silver, lead, zinc, nickel, metallurgical coal and manganese from its operations in Australia, Southern Africa and South America.

How much dividend income is the business going to pay?

If we look at the last two dividends declared by the ASX mining share, it amounts to a grossed-up dividend yield of 10.6%. Investors have received a lot of dividends since the start of 2022.

But, the annual dividend per share is expected to reduce significantly during FY23 compared to FY22.

Commsec numbers currently suggest that South32 is going to pay a total dividend per share of 19.3 cents. This would be a grossed-up dividend yield of 6.3%.

So, what I’m trying to show is that the trailing dividend yield may be a bit of an illusion because the dividends are expected to reduce this year.

Why are the dividends reducing?

The performance of a miner can be heavily influenced by how commodity prices move. The higher revenue from a stronger commodity price largely adds to net profit after tax (NPAT) and operating cash flow.

However, when commodity prices fall it can largely hurt net profit and operating cash flow.

In the FY23 half-year result, we saw South32’s profit after tax fall 34% to US$685 million, while underlying earnings sank 44% to US$560 million. That’s not helpful for the South32 share price.

The business saw “strong production results”, though commodity prices “retreated from record levels.” There was production growth of 12%.

However, the company did say that its “long-term outlook is “positive” as a result of its portfolio investments and high-quality development options in the metals critical for a low-carbon future.”

Projections

However, while FY23 dividends are expected to reduce, payments to shareholders could then grow in FY24 to 22.2 cents per share. This would be a grossed-up dividend yield of 7.3%.

Then, another good increase could occur in FY25 if the ASX mining share is able to generate the forecast earnings per share (EPS) of 52.9 cents. The FY25 annual dividend per share could be 26.7 cents, which would be a grossed-up dividend yield of 8.75%. So, not as good as FY22, but the yield could steadily climb after FY23.

The South32 share price is up over 20% in the past six months, so it may not be the most opportunistic time to buy shares. But, I do like the diversification it offers and the increasing exposure to commodities involved with a low-carbon future.  

The post Buying South32 shares for the dividends? Read this first appeared first on The Motley Fool Australia.

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More reading

• 2 ASX 200 mining shares just upgraded by Macquarie, one with 20% upside
• Buy BHP and this ASX 200 mining share now: analysts
• Analysts say these ASX dividend shares can boost your passive income
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Electro Optic Systems Holdings Ltd (ASX: EOS) share price has been a big mover on Monday.

At one stage this morning, the defence and communications company’s shares were up 53% to 70 cents.

The EOS share price has now pulled back but remains up 28% to 58 cents.

Why is the EOS share price racing higher?

Investors have been buying the company’s shares today after it announced a major contract win.

According to the release, EOS’ Defence Systems business has secured a contract with SpetsTechnoExport (STE), a Ukrainian state-owned foreign trade enterprise.

EOS will supply STE with up to one hundred EOS heavy remote weapon systems (RWS), including spares and related services, for use in Ukraine. The contract is valued at up to US$80 million (approximately A$120 million) and is expected to be supplied during 2023 and 2024.

EOS’ RWS is a long-established product and is designed to deliver greater accuracy and reliability than any competitor system. Over 2,500 units have been sold and it is currently in use with several military services in Australia, North America, Europe and South-East Asia.

What’s next?

It is worth noting that the contract is not yet binding. It remains conditional on demonstration testing and is subject to other customary terms for military contracts. In addition, consistent with typical wartime contract arrangements, the contract is also subject to conditional early termination rights in favour of STE.

Pleasingly, management revealed that this may not be the final contract. It advised that it continues to work on other opportunities relating to Ukraine, including opportunities for direct supply to the country, and to other countries providing support to Ukraine.

However, it has warned that there is no certainty that any particular outcome or transaction will result from these discussions. EOS will keep the market updated as appropriate.

The post Electro Optic Systems share price rockets 53% on Ukraine deal appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Electro Optic Systems. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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S&P/ASX 200 Index (ASX: XJO) energy shares are off to a flying start on Monday.

The big energy stocks are helping send the S&P/ASX 200 Energy Index (ASX: XEJ) up 3.29% in early trade, far outpacing the solid 0.85% gains posted by the ASX 200 at this same time.

At the time of writing, the Santos Ltd (ASX: STO) share price, pictured below, is up 3.19%.

Meanwhile, rival ASX 200 energy share Woodside Energy Group Ltd (ASX: WDS) is flying 3.48% higher.

What’s piquing investor interest?

Investors are bidding up the ASX 200 energy shares after a surprise decision by the Organization of Petroleum Exporting Countries (OPEC+) to slash a million barrels per day from their production levels.

Saudi Arabia, concerned about macro factors depressing global oil prices, will itself provide half those cuts. The nation has pledged to reduce its daily output by a whopping 500,000 barrels per day.

With the market having widely priced in steady production levels from the cartel, oil soared more than 8% on the news.

At the time of writing, Brent crude is trading for US$84.94 per barrel. That’s up from US$79.77 on Friday.

While that’s clearly welcome news for ASX 200 energy shares, it’s not so welcome for political leaders battling inflation on the home front. US President Joe Biden was said to be displeased with the timing of OPEC’s decision.

“Today’s move, like the October cut, can be read as another clear signal that Saudi Arabia and its OPEC partners will seek to short circuit further macro selloffs. This decision will certainly not be welcomed by the White House,” RBC Capital Markets LLC analysts said (quoted by Bloomberg).

“We see this closely held decision as just one more indication that the Saudi leadership is making its oil production decisions with a clear eye to their own economic self-interests,”  head of commodity strategy at RBC Capital Markets Helima Croft added.

How have these ASX 200 energy shares been tracking?

With a big leap higher this morning, the Woodside share price has regained most of its 2023 losses, currently down 1.25% for the calendar year so far.

ASX 200 energy share Santos, meanwhile, has clawed back into the green for the year, up 1.2%.

The post Why are ASX 200 energy shares off to such a great start on Monday? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• 5 things to watch on the ASX 200 on Friday
• Why Jervois Global, Mincor, Newcrest, and Santos shares are dropping today
• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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