Why the BHP (ASX:BHP) share price is slumping 1% today

The S&P/ASX 200 Index (ASX: XJO) has kicked off this Tuesday on the wrong foot. The ASX 200 is currently down 0.14% at the time of writing to 7,518 points. But one ASX 200 blue chip share is faring far worse today.

That would be BHP Group Ltd (ASX: BHP). BHP shares are presently sitting at $41.78 a share, down 0.97% for the day so far.

But this is only the latest chapter in what has been a very tough few weeks for BHP shareholders. It was only a month or so ago that BHP shares were at their new all-time high of $54.55 a share.

On today’s pricing, the miner is now down more than 23% from those highs. It’s also down around 8% over the past trading week alone.

Now, much of these losses can be attributed to BHP going ex-dividend for its final dividend payment last Thursday. Back in earnings season, BHP announced the largest single dividend in its history – a final, fully franked, dividend of US$2 per share. Taking this out of the BHP share price is obviously going to cause a dent, which we duly saw last week.

But today’s slump has nothing to do with this.

So what’s behind the weakness on BHP shares this Tuesday?

Iron ore pricing slump whacks BHP share price

Well, it’s important to note that it’s not just BHP feeling the market blues today. Fellow iron digger Rio Tinto Limited (ASX: RIO) has also taken a hit. Rio shares are currently down 1.08% to $109.50. Spare a thought for shareholders of Fortescue Metals Group Limited (ASX: FMG) today too. Fortescue shares are down a far nastier 3.07% so far today to $18.00 a share.

So what’s going on with BHP and the others here? Well, a sector-wide sell off like this usually indicates some sector-wide problem. And, as my Fool colleague James outlined this morning, we certainly just saw one. The iron ore price  slumped a nasty 9.3% overnight.

It’s currently sitting at just US$134 a tonne, well below the prices of US$200-plus that we saw only a month or two ago. As we reported on earlier, this seems to be related to the decision from the Chinese Communist Party taking a “stricter stance against steelmakers on steel production curbs and the start of sintering restrictions”.

Now that prices are falling and miners like BHP have gone ex-dividend from their most recent record payouts, it seems many investors are hightailing it out of this corner of the market. This is probably why we are seeing significant selling pressure for BHP and other iron ore miners today on the ASX boards.

At the current BHP share price, the Big Australian has a market capitalisation of $124.47 billion, a price-to-earnings (P/E) ratio of 13.8 and a trailing dividend yield of 9.8%.

The post Why the BHP (ASX:BHP) share price is slumping 1% today appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: BHP & Fortescue fall, Flight Centre storms higher
• Transurban (ASX:TCL) share price could get boost from WestConnex rumour
• Why BHP, Fortescue, & Rio Tinto shares could tumble today
• How does the BHP (ASX:BHP) dividend compare to its sector?
• 5 things to watch on the ASX 200 on Tuesday

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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