The ASX is higher today, defying the fears brought on by the Russian invasion of Ukraine.
The S&P/ASX200 gained 83.00 points or 1.19% to 7,063.30. Over the last five days, the index has lost 0.75% and 4.31% over the last 52 weeks.
Top-performing stocks in this index were Mesoblast Ltd (ASX:MSB) up 17.48% and Paladin Energy Ltd (ASX:PDN) up 10.71%. Neither had news to drive it today, so they must be riding today’s wave.
As for Paladin, it’s a good time to be an energy stock.
Speaking of Energy stocks, Woodside Petroleum Ltd and Santos Ltd (ASX:STO) have weighed in on rising energy prices.
LNG spot prices four times higher than oil
The huge spike in Asian LNG spot prices to the equivalent of $US500 a barrel is four times higher than oil.
Rising energy prices including gas have sparked global concerns over energy security.
Woodside has weighed in with chief executive Meg O'Neill telling a Sydney conference, "We've seen gas prices that have spiked at levels that are even more unprecedented than the oil prices, so the Asian price marker hit $US82 per million British thermal units.
"And I know that's not a unit people understand but an oil equivalent is $US500 a barrel, so absolutely off the charts.
"I think the one thing that the crisis in Ukraine will really cause the world to think very soberly about is the importance of energy security.
"And so when we talk to customers, they want affordable energy, they want lower carbon energy, but first and foremost, they want reliable energy.
"And it's just like when you go home, you hit a switch you expect the light to turn on and our customers, who are largely in Asia, have that same expectation.
"I think Russia is going to cause the world to think really hard about energy security."
Santos warns of continued high prices
Santos chief executive Kevin Gallagher believes oil prices could be high for some time to come, especially now the US and UK have stated they will ban Russian oil imports.
"This feels to me like unless there's another massive slowdown as a consequence of a massive recession or another pandemic we could be stuck with very high prices, unhealthily high prices for some time," he said.
Russia has said that any ban could double oil prices to $300+ per barrel.
"Projects are taking twice as long to get up and get approved. So, it feels different this time in terms of the supply side's ability to respond. And my feeling here is that I don't like when oil prices go to too high, it concerns me because you get supply and demand destruction," Gallagher said.
"You get the inflationary effects of that which affect us all at the end of the day. But unless there's a change in government policies globally, particularly if we go down the route of sanctions on Russian oil, I just don't see how the supply side can fill the gap and sort of meaningful timeframe to address these high prices."
What the RBA said about mini resources boom
RBA Governor Phillip Lowe spoke about a range of issues at The Australian Financial Review Business Summit today. His comments around a mini resources boom are worth noting.
“It’s possible that happens, but I think it’s quite unlikely because for that to happen, resource companies would have to decide now to invest heavily on the back of higher prices because that’s what happened in the previous resources boom. China demanded a lot of steel, the price of iron ore and other commodities went up and Australian producers invested a huge amount.
“The economy was on the verge of overheating because of all the investment income. But this situation is quite different. It’s unlikely that the resource companies are going to go out and invest a lot at the moment because of the higher commodity prices. They’re not expecting a boom. We’re expecting a lot of this extra national income to be saved this time because resource companies aren’t likely to invest a lot.
“I don’t know this, but I suspect the governments aren’t going to spend a lot of revenue. They’ll take it through the bottom line after having borrowed a lot in the last couple of years, and households aren’t going to feel the benefits of national income.
"What they’re going to feel is higher petrol prices, so they’re not likely to increase spending. Businesses and governments are likely to spend more, households are going to spend more. Most of this extra national income will flow through to the bottom line in terms of national saving.
“I could be wrong; if the resource companies decide this is a fantastic opportunity to once again expand the capital base, that could be different.”