Will Fortescue Metals Group’s Share Price Keep Falling?

By ,

At the time of writing, shares of Fortescue Metals Group Ltd [ASX:FMG] are down by 4.54% for the day, to $6.65 per share.

Why Fortescue Metals Group’s share price is slipping?

Over the last few weeks, Fortescue Metals Group’s share price skyrocketed following the Brumadinho dam burst in Brazil ― the country’s worst mine disaster on record. Take a look at FMG’s share price chart below:

 

Fortescue Metals Group's share price
Source: CommSec

FMG shares ripped higher following the mining incident in Brazil. The share price run continued with the latest earnings report published last week. That’s good news for shareholders. But, given the strong run-up, the share price has started to roll over. This should be expected after a significant and unexpected share price melt-up.

What now for Fortescue Metals Group?

Technically speaking, FMG’s share price seems to have peaked. The iron ore ― the main contributor to FMG’s earnings ― is the leading indicator for the company. It’s started to roll over in recent days:

 

Fortescue Metals Group's share price

Source: tradingview.com

The iron ore price skyrocketed from December and hit a high earlier in the month. That’s mostly why FMG’s share price outperformed the market. That said, iron ore is clearly pulling back and that’s putting pressure on FMG’s share price. The market priced large expectations into the company, which led to extreme optimism.

Don’t be surprised to see FMG’s share price reverse sharply in the days ahead. Considering the above news is now priced into the market, traders are starting to take profits. In my view, if the iron ore price continues to fall, FMG’s share price could potentially fall back to $5 within the coming weeks.

Regards,

Jason Stevenson,
Resources Analyst, Money Morning

PS: Interested in mining stocks? My free new investor report, ‘Top 10 Mining ‘Money-Makers’ to Buy Now’, has everything you need to know to get started. To download that report for free, go here.

About Ryan Clarkson-Ledward

Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

Ryan is also the Editor…

ASX 200 News: IOUpay, Life360, Paradigm, BHP & Woodside

The benchmark S&P/ASX 200 [ASX:XJO] is inching higher on Tuesday morning, propelled by a rebounding iron ore price which pushed the big miners Fortescue Metals Group [ASX:FMG] and Rio Tinto [ASX:RIO] higher.

Fortescue Share Price: Record First Quarter Iron Ore Shipments (ASX:FMG)

Fortescue Metals Group [ASX:FMG] share price was relatively flat on the news, exchanging hands for $14.05 per share at time of writing, up 0.5%.

Nuclear Subs, Evergrande, and the Iron Ore Conundrum

It’d be very contrarian to take trades on iron ore at this stage, and the coast might not be clear until some support comes in on the iron ore spot price.

Should You Invest in Iron Ore Stocks? BHP, Rio and FMG

At time of writing, the share price of the big three iron ore miners are all up, with BHP Group [ASX:BHP], Rio Tinto [ASX:RIO] and Fortescue Metals Group [ASX:FMG] all tacking on 2–3% today.

US Stimulus Paves the Way for Commodities Boom

Almost like clockwork as the market started to wobble, the US passed more stimulus. The $1.9 trillion bills should prop up the market for the time being. There’s a subtext to this though, and it’s all about inflation

ASX Weekly Market Outlook and the Top Movers Last Week (ASX:XAO)

The week been saw a large pullback in the All Ords [ASX:XAO] by 208 points. Meaning the XAO is now in its 10th week of a sideways move after gaining ground quickly from the March low…