The Fortescue Metals Group Ltd (ASX: FMG) share price is trading at fresh year-to-date lows on Tuesday, amid a broad-based market selloff.
At the time of writing, the Fortescue share price is trading at $14.00, the lowest its been since July 2020.
What’s driving the Fortescue share price lower?
A quiet week for iron ore
Iron ore prices are expected to remain stable this week following China’s National Day public holiday running between 1 to 7 October.
Fastmarkets MB reported that prices remain relatively unchanged, edging just US$1.33, or 1.1% higher, to US$117.12 a tonne on Monday due to limited trading activity and liquidity.
US markets crater amid inflation concerns
The Dow Jones Industrial Average and Nasdaq Composite both tumbled more than 300 points, or 0.94% and 2.14% respectively, last night driven by inflation-based fears as oil rallied to a seven-year high.
“Investors, in my mind, are realising or thinking through a wall of worry that includes the debt ceiling, higher oil prices and inflation, a weaker-than-expected earnings season, and a Federal Reserve that’s becoming less dovish,” Lindsey Bell, chief investment strategist at Ally Invest told MarketWatch.
The broad-based selling taking place on the S&P/ASX 200 Index (ASX: XJO) on Tuesday has dragged the S&P/ASX 200 Materials (INDEXASX: XMJ) 1.31% lower.
Utilities and energy were the only sectors in the green.
Weak near-term outlook for iron ore prices
The Australian government’s commodity forecaster, the Office of the Chief Economist (OCE), expects iron ore prices to average around US$150 a tonne in 2021 before falling to below US$100 a tonne in 2022, according to its recent September quarterly report.
“Efforts by the Chinese government to curb China’s total steel output also appear to be taking greater hold and are expected to persist for the rest of 2021,” the OCE flagged.
From a supply-side perspective, the OCE said that iron ore supply is expected to improve in the second half of 2021.
“Vale’s Brazilian operations are slowly returning to output levels last seen prior to the January 2019 Brumadinho tailings dam collapse,” it reported.
Fortescue share price in the deep red
It feels like the Fortescue share price came down as fast as it went up, currently down 43% year-to-date and down 14% in the last 12 months.
The post Fortescue (ASX:FMG) share price slides to fresh year-to-date low appeared first on The Motley Fool Australia.
Should you invest $1,000 in Fortescue right now?
Before you consider Fortescue , you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Fortescue wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of August 16th 2021
More reading
- Why did the Fortescue (ASX:FMG) share price have such a lousy month in September?
- These were the 5 worst performing ASX shares in September
- Top brokers name 3 ASX shares to sell next week
- Why the Fortescue (ASX:FMG) share price was sold off in September
- These were the 5 worst performing ASX 200 shares in September
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.
from The Motley Fool Australia https://ift.tt/3BdHPgz
Leave a Reply