The S&P/ASX 200 Index (ASX: XJO) is enjoying a very healthy start to the week so far this Monday. At the time of writing, the ASX 200 is up a pleasing 1.02% at over 7,100 points. So it might come as a surprise to see that the BHP Group Ltd (ASX: BHP) share price is firmly in the red today.
Yes, BHP shares are currently down by 0.4% at $47.50 each. Since the BHP share price makes up more than 10% of the ASX 200 these days, this is quite the divergence indeed.
Well, we can always point to the price of iron ore itself, BHP’s largest commodity base by far. As my Fool colleague James covered this morning, iron ore endured a slight pullback last Friday night, dropping 1.2% to US$154.50 a tonne. That saw the BHP share price fall on Friday’s trading. And this seems to be repeating today thus far.
Is the BHP share price missing out on oil’s gains?
But perhaps investors are also being pessimistic about another facet of BHP’s business: crude oil. BHP is currently a notable oil and liquified natural gas (LNG) producer. But it won’t be for long. Last year, the company agreed to offload its oil business to ASX 200 energy company Woodside Petroleum Limited (ASX: WPL). But that was inked when oil was well under US$90 a barrel. More recently, we’ve seen crude jump as high as US$130 a barrel. Today, Brent crude remains above US$110 a barrel, which is still a very high price by historical standards.
But it’s a boom that Woodside might benefit more from over the rest of the year, rather than BHP shares. The demerger of BHP’s oil assets is scheduled to be completed by the second quarter of this year. If oil remains anything close to the levels it is sitting at today for the rest of the year, it will be Woodside’s gain and BHP’s loss.
In comments given to The Australian today, Woodside CEO Meg O’Neill said that the company is looking forward to helping fill the gaps that global sanctions against Russia have helped create in the Asian energy market. She named Japan as a key goal, saying that the world’s third-largest economy will be “leaning more towards countries like Australia” for their future energy needs.
But perhaps BHP shareholders don’t have too much to complain about as it currently stands. The BHP share price is now up more than 33% since November last year.
At the current BHP share price, this ASX 200 miner has a market capitalisation of $241.4 billion, with a dividend yield of 10.1%.
The post The ASX 200 is up, so why is the BHP (ASX:BHP) share price falling today? appeared first on The Motley Fool Australia.
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More reading
- Leading brokers name 3 ASX shares to buy today
- 5 things to watch on the ASX 200 on Monday
- ‘What’s not to like’ about BHP (ASX:BHP) shares? Experts weigh in
- Guess which 3 ASX 200 shares are among the top 10 dividend payers in the world
- Is this still the dawning of the age of ASX commodity shares?
Motley Fool contributor Sebastian Bowen 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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