At lunch on Wednesday the S&P/ASX 200 Index (ASX: XJO) is on course to record a very strong gain. The benchmark index is up 1% to 5,894.9 points at the time of writing.

Here’s what is happening on the ASX 200 today:

Afterpay hits a record high.

The Afterpay Ltd (ASX: APT) share price has been a positive performer on Wednesday. Its shares jumped 5.5% to a record high of $52.29 this morning. Investors have been buying its shares after rival Zip Co Ltd (ASX: Z1P) announced its expansion into the lucrative U.S. market via the acquisition of QuadPay. Investors may believe the increased competition will accelerate the adoption of buy now pay later platforms in the multi-trillion dollar market.

Big four banks jump.

It has been a very positive day for Westpac Banking Corp (ASX: WBC) and the rest of the big four banks. All four banks are trading notably higher at lunch and are playing a key role in driving the ASX 200 higher. The best performer in the group at lunch is the Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price. Its shares are up 4% at the time of writing. This morning the Australian Bureau of Statistics revealed that GDP fell 0.3% during the first quarter. This was in line with expectations.

Gold miners sink lower.

One area of the market acting as a drag on the ASX 200 index today is the gold sector. The likes of Evolution Mining Ltd (ASX: EVN) and Newcrest Mining Limited (ASX: NCM) are all trading notably lower at lunch. This follows a reasonable pullback in the gold price overnight. The price of the precious metal tumbled after Wall Street began betting on a successful economic restart. At lunch the S&P/ASX All Ordinaries Gold index is down 4.4%.

Best and worst ASX 200 performers.

The best performer on the ASX 200 on Wednesday has been the SKYCITY Entertainment Group Limited (ASX: SKC) share price with a 9.5% gain. This morning the casino and resorts operator revealed that its New Zealand operations have performed well since reopening. The worst performer on the ASX 200 is the Silver Lake Resources Limited (ASX: SLR) share price. Silver Lake’s shares are down 7% after the gold price decline.

More reading

• The smartest ASX 200 shares to buy with $2,500 today
• Why Afterpay, Infigen, Qantas, & Zip Co shares are charging higher
• Are our ASX big miners on an earnings upgrade cycle?
• Can ASX 200 retail shares outperform this year?
• 1 ASX 200 tech share to buy and hold for a decade

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Sky City Entertainment Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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Our largest miners may be in a cum-upgrade cycle that could see their share prices keep outperforming for a little longer yet!

We have Brazil to thank for this as the country’s poor management of the COVID-19 pandemic will curtail its iron ore exports.

Australia’s ability to flatten the coronavirus curve is giving the BHP Group Ltd (ASX: BHP) share price, Rio Tinto Limited (ASX: RIO) share price and Fortescue Metals Group Limited (ASX: FMG) share price an advantage.

I reckon these ASX miners are on an earnings upgrade cycle.

The Brazilian advantage

Brazil’s biggest iron ore miner Vale SA told the Australian Financial Review that its mines are running on a skeleton crew and that it’s license to operate is under “extreme pressure” from authorities.

Vale is not only sending home workers who tested positive for the virus, but anyone who had contact with the infected employee.

Meanwhile, the miner was forced to turn to the courts on Friday to keep its Itabira mining hub open after government officials tried to close it on the belief that the hub is a source of infections.

Broker upgrade

The escalating COVID-19 crisis in the Latin American country prompted Goldman Sachs to upgrade its iron ore forecast for 2020.

The broker thinks Vale will only be able to hit the low end of its production guidance in 2020, which will leave the iron ore market short of supply.

“We now expect Vale to sell 311Mt [million tonnes] of iron ore vs. guidance of 310-330Mt and for China steel production to grow by 0.4% to 998Mt but for steel production to peak mid-year and then moderate in 2H,” said the broker.

Iron ore forecasts for 2020 and 2021

Goldman Sachs is now forecasting the price of the steel making ingredient to average US$86 a tonne this year and US$80 a tonne in 2021. That’s about 7% to 8% higher than its original estimate.

What this translates to is a 12% upgrade to Fortescue’s earnings per share (EPS) forecast for both FY21 and FY22. Rio’s FY20 EPS gets boosted by 10% while BHP’s FY21 EPS enjoys an 8% lift.

“We forecast an average FCF [free cash flow] yield of 7-9% for the BHP and RIO over the next 3 years,” said Goldman.

“We think that copper production could disappoint over the next 12-18 months for both stocks, however, capex guidance could positively surprise and FCF should remain very attractive.”

Which ASX miner should you buy?

The broker is recommending BHP and Rio as “buy” but is keeping its “hold” rating on Fortescue after the stock’s big recent surge to a record high.

Goldman’s price target on BHP is $37.80, Rio Tinto $101.10 and Fortescue $12.10 a share.

I am expecting other brokers to be lifting their earnings forecasts on the sector too. Let the ASX miner earnings upgrade cycle begin!

More reading

• The smartest ASX 200 shares to buy with $2,500 today
• ASX 200 up 1%: Big four banks jump, Afterpay hits record high
• Can ASX 200 retail shares outperform this year?
• 1 ASX 200 tech share to buy and hold for a decade
• JobMaker is coming. These 3 ASX 200 shares could benefit

Motley Fool contributor Brendon Lau owns shares of BHP Billiton Limited and Rio Tinto Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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 Musgrave Minerals Ltd (ASX: MGV) share price has charged out of a trading halt this morning on the back of drilling results at its flagship Cue Project.

Musgrave Minerals is an active Australian gold and base metals explorer. Its cornerstone project is the Cue Gold Project in the Murchison Province of Western Australia. The company also has a big footprint in the Musgrave Province, one of the least explored exploration frontiers in the country.

At the end of FY19, Westgold Resources Ltd (ASX: WGX) was Musgrave Minerals’ largest shareholder, owning 16.78% of shares. Musgrave’s shareholder base also comprises other big ASX names like Evolution Mining Ltd (ASX: EVN) and IGO Ltd (ASX: IGO).

Why the Musgrave Minerals share price is spiking

This morning, Musgrave reported assay results for the first 12 reverse circulation (RC) drill holes from the current program at the new Starlight gold discovery. The Starlight link-lode is located at the Break of Day deposit within the Cue Gold Project.

For a bit of background, the Cue Gold Project hosts total resources of 6.45 million tonnes at 3.0 grams per tonne (g/t) gold for 613,000 ounces. This includes the Break of Day deposit (868,000 tonnes at 7.2 g/t gold for 199,000 ounces of contained gold) and the Lena deposit (4.3 million tonnes at 2.3 g/t gold for 325,000 ounces of contained gold).

Significant intercepts announced this morning from the initial RC drill holes at Starlight include:

• 12 metres at 112.9 g/t gold from 36 metres;
• 48 metres at 4.4 g/t gold from 30 metres;
• 7 metres at 13.7 g/t gold 114 metres;
• 6 metres at 5.7 g/t gold from 81 metres; and
• 6 metres at 5.2 g/t gold from 176 metres.

The drilling is focused on infilling and extending the new high-grade lode where mineralisation has been intersected over a strike of more than 115 metres.

Commenting on the results, managing director Rob Waugh said:

“This is a great start to the program and confirms the current model extending the mineralisation both up dip where it approaches the surface and down dip where it remains open. The bonanza high-grade, near surface mineralisation will enhance the open cut development potential of the deposit while the deeper mineralisation will enhance the underground potential.”

The current RC drilling program at Break of Day is approximately 60% complete and consists of more than 36 holes for around 7,000 metres.

After flying as much as 93.33% higher in early trade, the Musgrave Minerals share price is currently sitting 53.33% higher for the day at 23 cents per share. This takes its market capitalisation at the time of writing to around $106 million.

More reading

• 3 emerging trends in ASX resources shares

Motley Fool contributor Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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