ASX uranium shares are surging this week. Here’s why

A bullish overnight performance for uranium and rising spot prices are driving up these ASX-listed players

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ASX uranium shares are surging across the board for a second day following a tsunami of capital inflow into the sector.

Let’s take a closer look at what’s going on today.

ASX uranium shares extend winning streak

Yesterday, ASX uranium shares rallied double-digits across the board from the largest, most established players like Paladin Energy Ltd (ASX: PDN) all the way through to speculative explorers like 92 Energy Ltd (ASX: 92E).

The bullish performance continues on Thursday, with the Paladin Energy share price opening 5.2% to 91.5 cents this morning.

More advanced explorers such as Boss Energy Ltd (ASX: BOE) and Deep Yellow Limited (ASX: DYL) also opened a respective 5.4% and 2.3% higher at the morning bell.

On the more speculative end of town, ASX uranium shares including Bannerman Energy Ltd (ASX: BMN)Lotus Resources Ltd (ASX: LOT), Peninsula Energy Ltd (ASX: PEN), and Alligator Energy Ltd (ASX: AGE) also jumped on open.

It looks like the ASX uranium shares have since taken a breather after rallying at the morning bell. Many have partially retreated or faded into slightly negative territory at the time of writing.

What’s driving the re-rate for ASX uranium shares?

Uranium ETF jumps again on record volume

On Wednesday, the Global X Uranium exchange-traded fund (ETF) surged 11.65% on the back of its highest volume since inception. Just over 6.1 million shares traded hands, compared to its 10-day average of around 2.3 million shares.

Last night, the uranium ETF extended its gains, adding another 6.84%, closing at a fresh all-time high. This move was driven by another record volume day, with 6.3 million shares traded.

Evidently, the market is waking up to the role that uranium could play in achieving net zero emissions and supporting the energy crisis taking place across China and Europe.

The uranium ETF has a 12.1% allocation towards ASX uranium shares, with exposure to players including Paladin Energy, Boss Energy, Bannerman Energy and more.

Uranium spot prices tick higher

Another factor in the bullish performance of ASX uranium shares is the resurgence of spot prices.

Uranium spot prices surged US$6.00/lb or 14.8% to US$46.5/lb, according to Numerco.

Uranium prices have rebounded strongly after hitting US$50/lb on 17 September.

Sprott’s buying spree continues

Sprott asset management and its physical uranium trust has been pointed out as a major catalyst behind the re-rate for the uranium sector.

Its uranium trust is one of few funds that invests in physical uranium, taking it off the spot market and tightening supply.

Sprott tweeted this morning that it added another 1.15 million pounds of physical uranium. That brings its total holdings to well over 30 million pounds.

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.

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