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Australian energy stocks to watch

As the ASX 200 fell by -1.2% last week following a wild ride on Wall Street and after the RBA hiked rates by another 25bp to 3.1%, Tony Sycamore looks at three Australian energy stocks to watch.

Source: Bloomberg

ASX 200 overview

Last week the ASX 200 fell by -1.2% following a wild ride on Wall Street and after the RBA hiked rates by another 25bp to 3.1%. Before markets can take a well-deserved break for the holiday period, a huge week lies ahead, including U.S inflation data, key central bank interest rate meetings, Australian labour force, and consumer confidence data.

Typically, when the ASX 200 falls, the defensive Utility sector outperforms. However, Utility shares have been unceremoniously dumped in the early part of this week following the Albanese government's emergency legislation aimed at capping coal and gas prices to lower energy bills.

We look at three utility/energy stocks in the article below.

  • Origin Energy

Origin Energy fell by 7.82%, closing at $7.19 on Monday on concerns around the government's proposed intervention in gas and coal markets. The legislation, if passed, will mean producers will not be able to charge more than $12 a gigajoule for the gas they sell.

Last month Origin agreed to a $9 a-share takeover offer from Brookfield and Mid Ocean which valued the business at $18.4bn. However, the deal was not formally binding. Price caps will likely impact Origin's energy supply business, and the $9 per share bid now looks rich. There is a risk that the Brookfield consortium will walkway from the deal.

Despite Monday's sell-off, the share price of Origin is still up 37% in 2022. Technically there is short-term support at $7.13, coming from the May 2022 high. Below that, the $6.48 high from May 2022 will offer medium-term support.

Origin Energy daily chart

Source: TradingView
  • AGL Energy

AGL Energy is another company in the firing line of the government's proposed legislation to cap coal and gas prices.

After tumbling almost 7% on Monday, the share price of AGL closed 2.62% lower at $7.79. Nonetheless, the share price remains up over 27% in 2022 and was well supported on the dip below $7.50 - a level that may see buyers emerge again.

AGL daily chart

Source: TradingView
  • Coronado Global

As a result of the proposed government legislation, miners won't be able to sell thermal coal for more than US$125 per tonne, well below the going rate of US$400 per tonne.

The share price of Coronado Global fell 5.42% on Monday, closing at $1.92. The share price of Coronado has rallied over 50% this year, supported by the energy crisis in Europe and the war in Ukraine. Short-term support is viewed not far below at $1.85, and medium-term support is between $1.60 and $1.40.

Coronado Global daily chart

Source: TradingView

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This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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