The Latest Story for Rio Tinto & Iron Ore

At the time of writing, shares of Rio Tinto Ltd [ASX:RIO] are down by 1.61%, to $77.18 per share.

Why did Rio Tinto shares do this?

Rio Tinto is considered a blue chip company and tends to move with the market. That makes sense. Following the 100-plus point drop earlier in the week, the ASX 200 Index is currently down by 43.1 points to 5,689.7 points:rio tinto commsec

Source: CommSec

The ASX 200 experience a ‘dead cat bounce’ after the US election. That said, the market isn’t out of the woods yet. It’s extremely volatile, figuring out what to do next. Will it be a move higher or lower? No one knows. But it looks like we’re going to see a technical re-test of 5,600 points ― major technical support. That move might wear on Rio Tinto’s share price:rio tinto commsec

Source: CommSec

Rio Tinto experienced a nice rally off major support at $70 on the chart above. The company bounced quickly to resistance at $82 per share. We’re seeing Rio Tinto moving back into the consolidation zone.

Australia’s Top 10 Mining Stocks. Download your free report now.

What now for Rio Tinto?

At this stage, the risk-reward favours the short side around these prices. But there’s little suggestion where Rio Tinto will move next or whether it will re-test its prior low. There’s a chance that could happen. However, we want to see the overall market boom for the share price to take off. That said, let’s take a look at the iron ore price ― the main contributor to Rio Tinto’s earnings:rio tinto trading view

Source: tradingview.com

The iron ore price has been booming since September, which reflected in Rio Tinto’s recent share price bounce. Yet, despite the strong uptrend, the iron ore spot price is nearing resistance. There’s question marks whether the price will drop lower in the short-term. In that case, given iron ore is the main source of Rio Tinto’s revenue, a lower iron ore price isn’t good news for shareholders.

The bottom line: Rio Tinto’s future is mainly dependent on the overall market today, rather than the iron ore price. But both have question marks this week, which probably isn’t good for Rio Tinto’s share price in the short-term. I believe Rio Tinto is likely to re-test the $70 level in the weeks ahead. We will track this story and analyse any future developments.

Regards,

Jason Stevenson,
Resources Analyst, Markets & Money

PS: Interested in mining stocks? My free new investor report, ‘The Top 10 Mining Stocks for 2018’, does exactly what it says in the name. I look at 10 companies that could make you huge money this year, and beyond. To download that report free, go here.


Jason Stevenson is Markets & Money’s resource analyst. He shares over a decade’s worth of investing and trading experience across resource stocks and commodity futures and options. He originally studied accounting and finance at Curtin University, where he was awarded a first-class honours degree. His professional background stems across high-net-worth, top tier accounting (corporate finance, tax and auditing), and sell-side equities research. Before joining the team at Markets and Money, Jason worked at boutique firms which advised fund managers and high-net-worth clients on where to invest. Whether it’s gold, crude oil, copper or an obscure metal like vanadium, you can rely on an in-depth analysis in Markets and Money. Jason also brings you extensive macro, political and geopolitical analysis from around the world. He leaves no stone unturned when it comes to telling the truth. Jason is also the lead analyst of Gold Stock Trader, a premium service for investors serious about precious metal stocks. Websites and financial e-letters Jason writes for:


Leave a Reply

Your email address will not be published. Required fields are marked *

Markets & Money