What happened to the Fortescue Metals share price?
Shares of Fortescue Metals Group Ltd [ASX:FMG] soared more than 2.7% today as the iron ore price and steel futures in China continued to rise, and expectations increased that Fortescue may pay a higher-than-expected dividend this year.
Why did the FMG shares rise?
The Fortescue share price has risen 230% over the past year. It’s up nearly 22% since the start of this year.
The rebound in the iron ore price, which is now above US$92 per tonne, represents a doubling in price since early 2016. In addition, iron ore is a key component in steel, with steel prices climbing in anticipation of production cuts at key Chinese steel mills.
Add to that the view of several analysts who believe that Fortescue may pay a bigger dividend this year. Fortescue’s last dividend was 12 cents per share in September. The company is due to announce its next dividend this week, hence the 2.7% gain in the stock price today.
What now for Fortescue Metals Group?
Fortescue has been a popular candidate among short sellers (those who think the share price will fall). Despite that, the share price has been one of the best performers among the big stocks on the Aussie market.
That said, it’s reasonable to think that after the recent run, much of the good news is already baked into the stock price. This is surely a stock for speculators, not investors
By Kris Sayce