Here’s why the Vulcan share price is charging 6% higher

This lithium share has started the week strongly…

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Key points

  • Vulcan shares are storming higher on Monday afternoon
  • Improving risk sentiment appears to have boost higher risk shares like lithium miners
  • In addition, optimism that lithium prices will remain higher for longer could be helping

The Vulcan Energy Resources Ltd (ASX: VUL) share price has started the week strongly.

In afternoon trade, the lithium developer’s shares are up 6% to $7.97.

Why is the Vulcan share price storming higher?

The Vulcan share price is charging higher today after investor sentiment in risk assets improved greatly.

This has been driven by the release of economic data in the United States, which shows that inflation slowed in April from a multi-decade high in March.

This has sparked hopes that the US won’t fall into a recession and that the US Federal Reserve won’t need to be as aggressive with its rate hikes.

The latter bodes well for higher risk assets like lithium shares, which have seen their valuations come under significant pressure in recent months.

Anything else?

It isn’t just the Vulcan share price that is rising today. A number of other lithium shares are rising today.

Core Lithium Ltd (ASX: CXO), Lake Resources N.L. (ASX: LKE), and Liontown Resources Limited (ASX: LTR) shares are also recording solid gains today.

As well as getting a boost from improvements in risk sentiment, optimism that lithium prices will remain higher for longer has given the sector a lift in recent sessions.

A key driver of this was the recent BMX auction update from Pilbara Minerals Ltd (ASX: PLS), which revealed another record lithium price received. Furthermore, it was well ahead of what analysts Macquarie Group Ltd (ASX: MQG) were expecting.

This appears to indicate that the lithium market has remained strong despite rising inflation and concerns over global economic growth.

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 recommended Macquarie Group Limited. 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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