Day: 3 June 2022

The S&P/ASX 200 Index (ASX: XJO) is on course to end the week on a positive note. In afternoon trade, the benchmark index is up 0.7% to 7,224.3 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are dropping:

Ansell Limited (ASX: ANN)

The Ansell share price is down over 3% to $26.02. This appears to have been driven by a broker note out of Credit Suisse this morning. According to the note, the broker has downgraded this health and safety products company’s shares to an underperform rating with a $24.00 price target. The broker believes input costs could weigh on Ansell’s margins.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

The Domino’s share price is down 3% to $66.90. Investors may be nervous ahead of the pizza chain operator’s investor update on Monday. This update is focused on its Asian operations but could include a trading update for the whole company.

Firefinch Ltd (ASX: FFX)

The Firefinch share price is down a massive 63% to 35.2 cents. This has been driven by the gold and lithium explorer’s shares going ex-dividend this morning for its in-specie dividend. This dividend relates to the demerger of the company’s lithium operations. Eligible shareholders will be receiving 1 Leo Lithium share for every 1.4 Firefinch shares they own.

Healius Ltd (ASX: HLS)

The Healius share price is down 8.5% to $3.81. Investors have been selling this healthcare company’s shares following the release of a trading update. That update revealed that trading conditions have been tough in the second half. As a result, during the first five months of the half, Healius has generated just under $100 million of EBIT. This compares to first half EBIT of $376 million.

The post Why Ansell, Domino’s, Firefinch, and Healius shares are dropping appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: Healius disappoints, BHP and Fortescue storm higher
• When will Leo Lithium shares be roaring on the ASX boards?
• Why is the Firefinch share price crashing 66% today?
• Why is the Healius share price sinking to a 52-week low today?
• 3 excellent ASX growth shares with major upside potential

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 Ansell Ltd. and Dominos Pizza Enterprises 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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The Rio Tinto Limited (ASX: RIO) share price moved in circles throughout May, registering a gain of around 1.4%.

In comparison, the S&P/ASX 200 Index (ASX: XJO) fell 3% after investors headed for the exits following a volatile month.

Let’s take a look below at what happened to the mining giant’s shares over the month of May.

What happened to Rio Tinto shares in May?

Rio Tinto shares wobbled last month despite the company delivering its annual general meeting (AGM) address to shareholders.

In the notes, Rio Tinto chair Simon Thompson highlighted the company’s significant progress to grow production in essential materials. This includes copper, lithium, iron ore and aluminium, all of which are vital for the transition to a low carbon economy.

Rio Tinto also mentioned the completed acquisition of the Rincon lithium project for $825 million.

Rincon is a large undeveloped lithium brine project located in the heart of the lithium triangle in the Salta Province of Argentina.

While the AGM was held during the afternoon, investors sold off the Rio Tinto share price in the days after.

A market correction came fast amidst high inflationary fears, the Russia-Ukraine war, and a resurgence of COVID-19 lockdowns in China.

As such, Rio Tinto shares fell almost 8% from 6 May to 10 May.

Nonetheless, after a bumpy ride, investor confidence swung back to action towards the end of the month.

The benchmark ASX 200 index rose 2.1% from 20 May until 31 May.

This led shares in the mining giant to record strong gains at the backend of the month.

Rio Tinto share price snapshot

Since the beginning of 2022, the Rio Tinto share price has gained 16% but is down around 8% for the last 12 months.

The company’s shares reached a 52-week low of $87.28 in November, before zipping 32% higher to the current share price of $116.18.

Rio Tino has a price-to-earnings (P/E) ratio of 6.21 and commands a market capitalisation of roughly $42.24 billion.

The post What happened to the Rio Tinto share price in May? appeared first on The Motley Fool Australia.

More reading

• Why are the ASX 200 iron ore giants outperforming on Friday?
• How might ‘green premiums’ impact the value of ASX mining shares?
• The Rio Tinto share price has leapt 11% in 3 weeks. Is there more to come?
• Why is the Rio Tinto share price having such a strong end to the week?
• What’s the outlook for ASX 200 dividend shares in the second half of 2022?

Motley Fool contributor Aaron Teboneras 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 Scott Phillips.

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Shares of Lake Resources N.L (ASX: LKE) surged around 11% higher in early afternoon trade on Friday, now retreating slightly to rest at $1.46 apiece.

Despite no market-sensitive news, investors have rallied the Lake Resources share price from a low of $1.32, as the stock looks to reverse out of a downward trend.

Zooming out to a longer-term view, and the Lake Resources share price has clipped a 45% gain this year to date.

What’s up with the Lake Resources share price?

ASX lithium stocks such as Lake were tackled hard this week amid large weakness in the broad segment seeing just about every miner down at least 10% by the end of play on Thursday.

Investors sold off lithium players at a rapid pace amid the release of a bearish note from Goldman Sachs downsizing its forecasts for lithium prices.

Additional headwinds via a cap on lithium carbonate prices of US$53 per kg from Argentina, a potential battery substitute, and electric vehicle maker BYD’s possible purchase of six lithium mines in Africa, have plagued the outlook for lithium producers.

Despite the calamity, lithium carbonate prices are buoyant and remain top-heavy at A$96,884 per tonne.

The strength in lithium pricing is perhaps one factor underpinning the resurgence in the Lake Resources share price today.

Large accounts and institutional investors backing the company are likely to be buyers at these pullback levels, especially if holding Lake Resources shares as part of an investment mandate.

Volume is also more than 9.6 million shares and tilted to the upside, amounting to more than half the 4-week average of 17.99 million shares.

A total of 581,292 shares were settled at a range of $1.45–$1.467 in today’s session with one block of 177,705 shares of noteworthy size, according to Bloomberg data.

After paring a fair slice of gains in 2022, the Lake Resources price has still held a 423% gain in the past 12 months of trade.

The post The Lake Resources share price has surged 11% today. Can it sustain the rally? appeared first on The Motley Fool Australia.

More reading

• Which ASX lithium shares are rebounding on Thursday, and which are not?
• Why did the Lake Resources share price tumble today?
• Here are the top 10 ASX shares today
• The Lake Resources share price has plummeted 30% in a month. What’s going on?
• Lake Resources share price tumbles again: Broker now sees almost 100% upside

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 Scott Phillips.

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) has followed the lead of Wall Street and is pushing higher. At the time of writing, the benchmark index is up 0.65% to 7,222.4 points.

Four ASX shares that are climbing more than most today are listed below. Here’s why they are storming higher:

Altium Limited (ASX: ALU)

The Altium share price is up 4% to $28.92. This follows a rebound in the tech sector on Friday following a strong night on the Nasdaq index. In addition, earlier this week Morgan Stanley put an overweight rating and $35.00 price target on its shares. Its analysts believe that chip shortages and supply chain issues could be supporting demand for its software and parts search engine.

Fortescue Metals Group Limited (ASX: FMG)

The Fortescue share price is up 4% to $21.47. Investors have been buying Fortescue and other iron ore mining shares on Friday after the price of the steel-making ingredient jumped overnight. According to CommSec, the benchmark 62% fines iron ore price rose by US$6.86 or 5.1% overnight to US$142.20 a tonne.

PeopleIn Ltd (ASX: PPE)

The PeopleIn share price is up 6% to $3.39. This follows the announcement of an agreement to acquire FIP Group for an upfront consideration of $45 million. This comprises $35 million cash and $10 million in shares. Management notes that FIP is a highly complementary workforce solutions business specialising in staffing solutions to the food and agricultural sector.

REA Group Limited (ASX: REA)

The REA share price is up 2.5% to $112.54. This follows the release of a number of positive broker notes in response to the property listings company’s investor day update. One of those was Goldman Sachs, which has retained its buy rating and $167.00 price target. Goldman notes that REA “remains confident it can achieve double digit revenue/EBITDA growth through the cycle.”

The post Why Altium, Fortescue, PeopleIn, and REA shares are storming higher appeared first on The Motley Fool Australia.

More reading

• Why are the ASX 200 iron ore giants outperforming on Friday?
• ASX 200 midday update: Healius disappoints, BHP and Fortescue storm higher
• Why Nanosonics, REA, Sayona Mining, and Zip shares are dropping
• Is the Fortescue share price predicted to rise in June?
• Top brokers name 3 ASX shares to buy today

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 positions in and has recommended Altium and Peoplein. The Motley Fool Australia has recommended Peoplein and REA 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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The Webjet Limited (ASX: WEB) share price has been outperforming in 2022 and some experts are tipping it could go higher.

However, some are still wary of the previously embattled S&P/ASX 200 Index (ASX: XJO) travel giant.

At the time of writing, the Webjet share price is trading at $6.03. That’s 11% higher than it was at the start of 2022. In comparison, the ASX 200 has tumbled 4.5% in that time.

Could Webjet’s stock have another 25% left in the tank? Let’s take a look at what experts are tipping for the ASX travel stock.

Could the Webjet share price gain another 25%?

The Webjet share price has taken off in 2022. Additionally, the company returned to profitability in the second half of the financial year.

In fact, Webjet is expecting to reach pre-pandemic booking levels sometime between October 2022 and March 2023.

Does that mean the stock’s rise will soon stall? Well, that depends on who you ask.

Arguing for the bulls is Ord Minnett. The broker is tipping the Webjet share price to reach $7.48 – a whopping 24.45% higher.

It expects Webjet to win on the recovery of business travel, The Motley Fool Australia’s Tristan Harrison reported last month.

Morgans and Citi are also hopeful for Webjet’s future. They’ve slapped the stock with price targets of $6.55 and $6.75 respectively. Both brokers are impressed by Webjet’s market in the United States.

Morgans also likes the company’s lower post-COVID cost base and consolidated system.

On the other side of the argument, Macquarie analysts are tipping the Webjet share price to fall to $5.80.

QVG Capital‘s Josh Clark is also bearish on Webjet. The portfolio manager told Livewire the company’s enterprise value appears to have recovered from the pandemic despite continuing re-opening related risks and unknowns.

The post Could the current Webjet share price offer a 25% upside? appeared first on The Motley Fool Australia.

More reading

• Experts name 2 top ASX growth shares to buy in June
• These are the 10 most shorted ASX shares
• What’s boosting the Webjet share price 3% higher on Friday?
• Up 10% in 9 trading days, what’s going on with the Webjet share price?
• Is the Webjet share price an opportunity that can soar?

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Brooke Cooper 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 and Webjet Ltd. 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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Overall, it’s turning out to be a pretty pleasant day so far and end to the trading week for the S&P/ASX 200 Index (ASX: XJO) this Friday. At the time of writing, the ASX 200 is up a healthy 0.76% at back over 7,200 points. ASX 200 energy shares are one of the sectors experiencing ‘a whole lotta love’ on the markets today.

So let’s see which ones have just smashed their 52-week highs.

3 ASX 200 energy shares smashing new highs today

Santos Ltd (ASX: STO) is our first energy share that is doing rather well today. So far, the Santos share price is up 0.3% at $8.36. But earlier in today’s session, this oil share hit a high of $8.40. That’s a new 52-week high for Santos, putting its 2022 performance at an impressive 26.4%. Santos shares are now up a pleasing 168% over the past five years.

But Santos isn’t the only oil driller that’s shot the moon today. Beach Energy Ltd (ASX: BPT) shares are also powering higher. Beach is currently trading at $1.80 a share, up a healthy 1.4% so far today. But earlier in this Friday’s session, Beach shares climbed as high as $1.82 each. This, as you might guess, is a new high watermark for Beach shares. This energy company is now up 37.4% in 2022 so far, as well as more than 205% over the past five years.

But it’s not just oil stocks that are spending some time in the sun. Another ASX 200 energy share rocketing today is Whitehaven Coal Ltd (ASX: WHC). Whitehaven shares have shot 2.77% higher today so far and are now trading at $5.38 each. Earlier, we saw Whitehaven climb as high as $5.41, which is the company’s new 52-week high. Whitehaven has been an especially lucrative ASX 200 share to own in recent times. It’s now up more than 95% in 2022 alone, and up more than 200% over the past 12 months.

Rising energy prices lift oil and coal shares

So why are all these ASX 200 energy shares hitting new 52-week highs today? Well, as my Fool colleague covered this morning, oil prices pushed decisively higher overnight. WTI crude oil prices were up 2.1% to US$117.67 a barrel, while the Brent crude oil price rose 1.75% to US$118.36 a barrel.

This is obviously good news for the companies that extract and sell oil and energy. Thus, we can probably say that this is the primary reason why we are seeing ASX 200 energy shares rise so decisively today.

The post 3 ASX 200 energy shares smashing multi-year highs on Friday appeared first on The Motley Fool Australia.

More reading

• 2 more of this broker’s best ASX share ideas for June
• Own Santos shares? Here’s the company’s response to the energy crisis
• 5 things to watch on the ASX 200 on Friday
• 3 ASX energy shares rocking new 52-week highs on Thursday
• The Beach Energy share price zipped higher in May. Here’s why

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 Scott Phillips.

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If you’re looking for a few new additions to your portfolio in June, then look no further.

Analysts at Morgans have picked out a number of ASX shares that they class as their best ideas for the month.

The first two I looked at can be found here. Whereas below are two more that the broker rates highly in June:

Santos Ltd (ASX: STO)

If you’re looking for exposure to the energy sector then Morgans thinks Santos could be worth considering. It likes the company’s diversified earnings base and sees plenty of growth opportunities. The broker explained:

We expect the resilience of STO’s growth profile and diversified earnings base see it best placed to outperform against a backdrop of a broader sector recovery. While pre-FEED, we see Dorado as likely to provide attractive growth for STO, while its recent acquisition increasing its stake in Darwin LNG has increased our confidence in Barossa’s development. PNG growth meanwhile remains a riskier proposition, with the government adamant it will keep a larger share of economic rents while operator Exxon has significantly deferred growth plans across its global portfolio.

Morgans has an add rating and $10.00 price target on the company’s shares. This compares to the latest Santos share price of $8.40.

Wesfarmers Ltd (ASX: WES)

Another ASX share on the broker’s best ideas list is this conglomerate. Morgans is bullish on Wesfarmers due to its high quality retail portfolio and strong management team. It also believes that recent share price weakness has created a buying opportunity. The broker said:

WES possesses one of the highest quality retail portfolios in Australia with strong brands including Bunnings, Kmart and Officeworks. The company is run by a highly regarded management team and the balance sheet is healthy. While COVID-related staff shortages are proving to be a challenge, the core Bunnings division (>60% of group EBIT) remains a solid performer as consumers continue to invest in their homes. We see the pullback in the share price as a good entry point for longer term investors.

Morgans has an add rating and $58.50 price target on the company’s shares. This compares to the latest Wesfarmers share price of $47.20.

The post 2 more of this broker’s best ASX share ideas for June appeared first on The Motley Fool Australia.

More reading

• Own Santos shares? Here’s the company’s response to the energy crisis
• 5 things to watch on the ASX 200 on Friday
• ASX 200 midday update: Pilbara Minerals names new CEO, Wesfarmers’ strategy update
• Why is the Wesfarmers share price slipping today?
• 5 things to watch on the ASX 200 on Thursday

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 positions in and has recommended Wesfarmers 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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The amount of cash a company has is a critical consideration no matter the circumstances.

As Warren Buffett once said, “Cash is to a business as oxygen is to an individual…” But where can an investor find cash-heavy companies inside the S&P/ASX 200 Index (ASX: XJO) outside of the typical major banks and miners?

Firstly, there is nothing wrong with investing in banks and mining giants. Some of those companies have even outperformed the benchmark index over the last five years. However, being concentrated in these sectors can come with risks, as is with any form of concentration.

At the end of the day, strong balance sheets are what matters. So, what are a few options for investors seeking cash behemoths beyond the two dominant sectors of the ASX?

Here are a few ASX 200 shares with billions to boot.

ASX 200 shares with bank accounts burst at the seams

CSL Limited (ASX: CSL)

Starting from the top, Australia’s largest healthcare company — CSL — claims the largest stash of cash apart from the banks and miners. Sitting atop A$8.73 billion in cash and cash equivalents, the biotechnology giant has a fortified balance sheet.

Although, it is important to note this amount is likely to change as CSL moves toward the acquisition of Vifor Pharma. In December 2021, the ASX-listed company designated A$8.4 billion of new debt and existing cash to partly fund the A$17.2 billion acquisition.

Block Inc (ASX: SQ2)

Another ASX 200 share with billions to its name is US-based fintech company, Block (formerly Square). At the end of March 2022, the Afterpay and Cash App owner counted A$6.6 billion on its balance sheet. This is despite operations becoming unprofitable for the trailing 12-month period.

In addition, it is worth highlighting that Block has a chunk of debt that is almost equivalent to its cash levels. Based on this, the company’s net cash level is approximately A$142 million.

ASX Ltd (ASX: ASX)

The final company to stand out among a spattering of banks and mining companies is Australian stock exchange operator, the ASX. With profit margins consistently above 40%, it’s no wonder this ASX 200 company has accumulated billions.

At the end of December 2021, the ASX had reached a bountiful $7.344 billion in cash and cash equivalents. That amount of money ensures plenty of cushioning during a down.

Recently, Catapult Wealth portfolio manager Tim Haselum named this company as its pick to hold if the market was closed for four years.

The post 3 ASX 200 shares swimming in billions, besides banks and miners appeared first on The Motley Fool Australia.

More reading

• Why are ASX 200 tech shares having such a cracking Friday?
• ASX share price slips following first female CEO appointment
• Why is the Block share price tumbling 4% on Thursday?
• What’s in store for the CSL share price in June?
• Analysts name 3 ASX 200 shares that could generate strong returns

Motley Fool contributor Mitchell Lawler has positions in Block, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block, Inc. and CSL Ltd. The Motley Fool Australia has positions in and has recommended Block, Inc. 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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If you own Santos Ltd (ASX: STO) shares you own part of a company doing everything it can do to address the energy crisis.

That’s according to Santos CEO, Kevin Gallagher, speaking at the Melbourne Mining Club yesterday.

The early impacts of rocketing energy prices

While Santos shares have received a tailwind from fast rising energy prices, the higher costs are already taking a bite out of household and company budgets.

From petrol to electricity to plane tickets, rocketing coal, oil and gas prices are seeing consumers shell out more of their hard-earned savings.

And that’s quickly seeping into the broader economy, fuelling inflation.

Take fresh food, for example.

With energy prices soaring, it costs a lot more to run the farm equipment, processing machinery and transport vehicles to get your food to market. Not to mention the stores are paying more to keep the lights on and the food chilled.

And with gas shortages now looming, the situation is unlikely to resolve itself any time soon.

What can ASX energy companies do?

Unfortunately, Santos and other Aussie energy companies can’t do much to bring extra gas online in the short term.

According to Gallagher (quoted by The Australian), “The industry can’t do any more than it’s doing now, because that pipeline is at capacity. No more gas can come in from Queensland than is coming today – the industry is doing all it can from Queensland to support the east coast market.”

The problem, Gallagher pointed out, lies in 10 years of underinvestment in new gas supplies, often hamstrung by lack of government approval and long-term clarity on the future of fossil fuel projects.

“The scarcity of new developments today is frightening with forecasts of tight supply over coming years,” Gallagher said. “Customers are crying out for this gas with more demand than we can meet when it comes to market around 2026. And I am trying to bring Narrabri to market earlier if that is possible.”

But mammoth projects like this take time. And even if Santos were to receive the green light from regulators to proceed immediately, Narrabri is still some three years from producing its first gas.

“It’s not going to be in three months’ time, or this year. We can start drilling wells, but we’ve got to build pipelines and plants,” Gallagher said.

The coal-seam gas project in New South Wales has been delayed for years, facing opposition from environmental groups concerned about the project’s impact on the local environment and global greenhouse gas emissions.

The finger of blame

When it comes to the energy crisis, don’t blame Santos or Australia’s other gas companies.

According to Gallagher (quoted by The Australian):

Shortages in the domestic market and the price shocks we have seen in recent weeks have nothing to do with the behaviour of gas producers or exporters, who are doing everything they can to support the market right now.

This is the consequence of more than a decade of energy policy failure that has stopped the industry developing more gas supply in a timely manner.

If you want more gas, you’ve got to produce more gas and develop more gas. You can’t just conjure it up magically when coal fired power stations turn off and renewables underperform.

As for the Australian Domestic Gas Security Mechanism, Gallagher said that could alleviate some of the problems, but only as a short-term fix.

“I don’t think that’s a bad thing. I think the government has got to do something in the short term, but that’s not a long-term solution,” he said. “It’s not a long-term solution to start threatening the LNG projects where our overseas customers have invested billions of dollars for their own energy security.”

How have Santos shares been tracking?

Santos shares have widely outperformed the benchmark, benefiting from the historically high gas prices.

Year-to-date the Santos share price is up 27%. That compares to a 5% loss posted by the S&P/ASX 200 Index (ASX: XJO).

The post Own Santos shares? Here’s the company’s response to the energy crisis appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Why did the Santos share price beat the ASX 200 in May?
• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 midday update: Beach, Santos rise but EML, Zip tumble
• Want to invest in energy? This is ‘our most preferred’ ASX share: Wilsons

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 Scott Phillips.

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) remains on course to end the week on a high. At the time of writing, the benchmark index is up 0.75% to 7,230.6 points.

A key driver of this has been gains by ASX 200 iron ore shares.

For example, here is a summary of how they are performing today:

• The BHP Group Ltd (ASX: BHP) share price is up 2.5% to $46.72
• The Champion Iron Ltd (ASX: CIA) share price is up 7% to $7.78
• The Fortescue Metals Group Limited (ASX: FMG) share price is up 4% to $21.43
• The Rio Tinto Limited (ASX: RIO) share price is up 2.5% to $115.78

What’s driving ASX 200 iron ore shares higher?

As you might have guessed, Australia’s leading iron ore shares are gaining today because of a rise in the price of the steel-making ingredient.

According to CommSec, the benchmark 62% fines iron ore price rose by US$6.86 or 5.1% overnight to US$142.20 a tonne.

This is materially higher than the cash costs per tonne of these miners, which means they are likely to be generating significant free cash flow right now. This bodes well for their earnings and ultimately their dividends.

Why is the iron ore price rising?

The catalyst for the rise in the iron ore price this week has been news that China is finally coming out of lockdowns. This has sparked hopes that demand for the metal will increase as China attempts to boost its struggling economy.

Though, it is worth noting that not everyone is positive on the metal. As we mentioned here earlier this week, the commodities team at Commonwealth Bank of Australia (ASX: CBA) is forecasting a sharp pullback in prices in the coming months.

The post Why are the ASX 200 iron ore giants outperforming on Friday? appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: Healius disappoints, BHP and Fortescue storm higher
• What is the BHP share price forecast for June?
• 2 top ASX dividend shares to buy according to analysts
• Top broker names 2 of the best ASX shares to buy in June
• Why is the ‘new’ Woodside share price leaping 6% today?

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 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 Scott Phillips.

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