Why has the uranium rally got this ASX share blasting 22% higher in 2 days?

As uranium prices reach 10-year highs, one particular ASX share is feeling the benefit.

| More on:
A man flies into the sky over a city building-scape with a rocket jet pack sketched onto his back representing the Imugene share price skyrocketing today

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Paladin Energy shares rose another 11% today, bringing the gain to more than 20% since Tuesday
  • Uranium prices are soaring and this has inflected positively on Paladin's share price  – not to mention the entire uranium basket
  • In the last 12 months, the Paladin Energy share price has climbed 110%

The Paladin Energy Ltd (ASX: PDN) share price surged 11% into the green today to close at 85.5 cents.

That marks a 22.14% jump in the past two days as uranium shares such as Paladin benefit from record-high uranium prices spurred on by a number of macro-undertones.

Uranium supply shock sends Paladin share price north

Uranium futures rallied hard in late February from a four-month low of US$44 per pound stretching up to US$54 per pound at the time of writing.

That's a 10-year high for the chemical element that supplies energy for hundreds of thousands of individuals and companies around the world.

European conflict has sent uranium prices in the elevator as Russia responded to US-imposed sanctions on oil imports by placing a ban on exports of raw materials overnight, according to Trading Economics.

Some experts even believe uranium could reach US$100 a pound, as Russia accounts for roughly 10% of global exports for the metal.

The supply shock has market pundits nervous and has countries that use uranium for energy scrambling to try and find other means of energy production to make up the shortfall.

"The US nuclear energy sector produces 20% of the country's electricity, and relies on Russia for 16% of its imports," according to Trading Economics.

As Paladin's share price closely traces the path of uranium with just a minor tracking error (shown below), investors were sure to be piling into the company today.

TradingView Chart

What else is weighing in?

Additionally, skyrocketing commodity markets could be impacting the Paladin share price today.

"…Skyrocketing oil prices prompted nations to shift to alternative energy sources," Trading Economics also said, suggesting the jump is impacting demand–supply curves.

As a result of tension being wound at both ends, uranium futures have climbed more than 95% in the past year and are up 24% in the past month after staying on trend today.

In fact, the Bloomberg Commodities Index (BCOM), a proxy to gauge the strength of the overall sector, has soared to 10-year highs as well just recently.

It remains to be seen what will happen with the flow of various commodities from this trade battle. Regardless, uranium players like Paladin are on the receiving end of some serious capital gains.

The Paladin share price has spiked hard this week and is now up 110% for the past year. However, it is down almost 3% this year to date.

Motley Fool contributor Zach Bristow 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.

More on Share Gainers

Happy coal miner.
Share Gainers

Up 75% this week, why is this ASX All Ords stock rocketing again today?

Investors are piling into this ASX 300 stock on Wednesday. But why?

Read more »

A young woman smiles as she rides a zip line high above the trees.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a bountiful session for investors this hump day.

Read more »

Man looking happy and excited as he looks at his mobile phone.
Share Gainers

Why Coronado, DroneShield, Lovisa, and Mayne Pharma shares are racing higher today

These shares are having a good time on hump day. But why?

Read more »

Man pointing at a blue rising share price graph.
Share Gainers

Guess which ASX 300 stock just rocketed 43% on big news!

Investors are piling into this ASX 300 stock on Wednesday. But why?

Read more »

Three friends leaping in the air in joy with a dog on the ground.
Share Gainers

Can May's top 3 performing ASX 50 stocks repeat in June?

These three blue chip stocks led the pack in the month of May. Do brokers think they can back it…

Read more »

The silhouettes of ten people holding hands with their arms raised against the sky, as the sun rises or sets in the background.
Share Gainers

Here are the top 10 ASX 200 shares today

The ASX was back to the races this Tuesday.

Read more »

A woman reaches her arms to the sky as a plane flies overhead at sunset.
Travel Shares

Why the Qantas share price soared 20% in May to new all-time highs

With another stellar month in May, Qantas shares are up more than 79% in a year.

Read more »

A man clenches his fists in excitement as gold coins fall from the sky.
Share Gainers

Why DroneShield, Judo, Pepper Money, and Strickland shares are surging today

These shares are having a good session on Tuesday. But why?

Read more »