The S&P/ASX 200 Index has ended up 1.8% today at the market close.

There are plenty of ASX shares that have soared in reaction to the news that a vaccine is showing very early promising signs. Investors love good news so share markets soared overnight and today the ASX has followed.

Some of today’s biggest ASX 200 movers

The Unibail-Rodamco-Westfield (ASX: URW) share price went up 11.4% today.

Worley Ltd (ASX: WOR) saw its share price jump by 9.6%.

The Nearmap Ltd (ASX: NEA) share price rose by 9%.

The oOh!Media Ltd (ASX: OML) share price grew by 8.6%.

COVID-19 conditions have caused cyclical and retail shares like shopping centres and businesses relating to advertising to be sold off. Today seems to have been a signal for some investors to jump into shares that have been most heavily affected. And something like Worley might benefit from the higher oil prices. 

James Hardie Industries plc (ASX: JHX) share price jumps

The James Hardie Industries plc (ASX: JHX) share price increased by 11.2% after announcing its result.

The compared reported group adjusted net operating profit of US$352.8 million for the full year, an increase of 17% compared to the prior corresponding period. Net sales of US$2.6 billion for the full year, this was an increase of 4% compared to last year.

Reported net profit increased by 6% to US$241.5 million. The ASX 200 share’s result was solid given the environment.

Tabcorp Holdings Limited (ASX: TAH) update

The ASX 200 gambling’s share price rose 2.5% today after giving an update.

Tabcorp said that it has secured agreements for a waiver of leverage and interest cover for the next two testing dates, but it won’t pay a final FY20 dividend.

It’s also in advanced discussions with its US private placement holders to obtain changes to existing covenants.

At 15 May 2020 it had $820 million of available liquidity of undrawn facilities and unrestricted cash. This compares to $749 million at 3 April 2020.

More reading

• ASX 200 storms 2% higher: Big four banks jump on COVID-19 vaccine news
• Why James Hardie, Oil Search, Webjet, & Westpac shares are jumping higher
• This is the latest ASX 200 stock to unveil double digit profit growth
• ASX gambling shares on watch as sporting codes make plans to resume
• These mid cap ASX shares could grow into large caps in the future

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Nearmap Ltd. The Motley Fool Australia has recommended oOh!Media 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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The Fortescue Metals Group Limited (ASX: FMG) share price hit another new all-time high today. Fortescue’s shares had been trending higher for most of the year, despite a brief (but sharp) dip in March, along with the rest of the broader S&P/ASX 200 Index (ASX: XJO). But since falling to a low of $8.58 on 9 March, the Fortescue share price has rallied over 62% to today’s new high of $13.95 before edging slightly lower to $13.93 at the close.

Real winners have been hard to find on the ASX 200 in recent months (especially in the dividend space), so is it too late to invest in Fortescue?

Why Fortescue shares are hitting the roof

Fortescue is an iron ore miner and one of the biggest in Australia at that. The company has a market capitalisation of over $40 billion (based on today’s closing share price). Unlike most other mining giants such as BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO), Fortescue is a pure-play on iron ore, with the red dirt comprising almost all of the company’s earnings.

And it’s this red dirt that is sending the Fortescue share price higher today. Iron ore prices have been holding up remarkably well since the coronavirus pandemic set in. They haven’t dipped below US$80 per tonne in 2020 so far. But this week, iron ore prices have pushed over US$90 per tonne amid global supply concerns.

According to the Australian Financial Review (AFR), the Brazilian mining sector is currently being severely affected by COVID-19, and supply cuts are very likely in 2020. Brazil is one of the largest exporters of iron ore, so this supply squeeze is causing global iron ore prices to rise, and the Fortescue share price to follow suit.

Is the Fortescue share price a buy at these levels?

On one level, there is a lot to like about the Fortescue share price today. Fortescue is an extremely low-cost producer of iron ore and has an average cost of extraction of around US$13 per tonne. With iron ore prices currently sitting around US$92 per tonne, Fortescue has basically got itself a license to print money. This money will no doubt fund massive dividend payments for Fortescue’s shareholders if the iron ore price stays anywhere close to its current level – which in itself is a scarce commodity these days.

But by investing in Fortescue (as with all ASX resources shares) you are always taking on pricing risk. Fortescue has no control over the pricing of the commodity it mines, which leaves it at the mercy of the market. Iron ore is a notoriously volatile commodity as well, having touched both US$187 a tonne and US$40 a tonne in the last decade.

Foolish Takeaway

I think Fortescue is a great company, and one well worth adding to a diversified ASX portfolio. Its costs are so low that I don’t think it will ever be in serious risk of bankruptcy, even in a sustained iron ore bear market. Saying that, anything can happen with commodity prices (just take a look at oil recently). As such, I would probably wait until this company isn’t trading at all-time highs before adding it to my buy list.

More reading

• Is the ASX 200 getting too far ahead of itself?
• Macquarie picks the best stocks to buy for the post COVID-19 rebound
• Could ASX 200 iron ore shares save the Australian economy?
• Are CBA shares in the buy zone?
• 3 ASX shares that will have strong dividends in 2020

Motley Fool contributor Sebastian Bowen 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.

The post Here’s why the Fortescue share price hit an all-time high today appeared first on Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) may be getting a bit too far ahead of itself at the moment. Or is it?

It has recovered 22% since that market low on 23 March 2020. The ASX 200 is still down 22% from the all-time high on 20 February 2020. What’s going to happen next?

Bear case for the ASX 200

Several major economies are predicting that this is going to be one of the most economically painful periods. Perhaps it will be the most painful ever. I’m not sure either way about that, but to me it seems unlikely that the ASX 200’s low would be in a month after the sell-off started if the real economy does get that bad. Maybe investors are getting complacent about the situation.

There’s a large amount of economic support for populations at the moment. Unemployment benefits have been boosted and Australia’s jobkeeper program is unprecedented. But how long will these last? The Australian federal government seems keen to lower the cost somehow. If these programs are ended prematurely it could cause shares to fall.

The GFC is a completely different situation to this, but the ASX 200 market selloff and economic damage took more than a few months to get through.

Bull case

There is already early signs of positive news of a vaccine for the coronavirus. There are dozens of teams around the world trying to develop a treatment or vaccine.

Central bank support and extremely low interest rates are supporting asset prices like the ASX 200. Perhaps that support is artificial, but it’s there nonetheless. The RBA has already said that low interest rates are probably going to stay around for at least for a few years.

A fall of more than 20% is a sizeable drop even after the recovery we’ve seen. These prices are still (long-term) good value compared to before and interest rates are a lot lower. Time will tell whether the bull or bear case is right. I think there could be more pain to come, but I’m still regularly investing each month.  

Within the ASX 200 I still there are plenty of opportunities like Brickworks Limited (ASX: BKW).

More reading

• Here’s why the Fortescue share price hit an all-time high today
• Macquarie picks the best stocks to buy for the post COVID-19 rebound
• Are CBA shares in the buy zone?
• 3 ASX 200 blue chip shares I would buy today
• The ASX big bank stock most likely to outperform in the COVID-19 recovery

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Brickworks. 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.

The post Is the ASX 200 getting too far ahead of itself? appeared first on Motley Fool Australia.

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