At the time of writing, shares of Rio Tinto Ltd [ASX:RIO] are down by 0.71%, to $78.20 per share.
Why did Rio Tinto Ltd shares do this?
Rio Tinto is considered a blue-chip company and tends to move with the market. That makes sense. The ASX 200 Index is currently down by 39.8 points to 6,167.8 points:
The ASX 200 rallied to retest resistance at the 6,200 level. It’s consolidating sideways, figuring out what to do next just under that level. Will it be a move higher? Who knows. But if the market moves higher, it should spell good news for Rio Tinto. Rio Tinto has seen a strong bounce this month:
Major support stood around $701 per share on the chart above. That’s roughly where Rio Tinto bounced off. We’re seeing Rio Tinto push towards resistance at the $80 per share level.
What now for Rio Tinto Ltd?
At this stage, the risk-reward favours the short side around these prices. But there’s little suggestion where Rio Tinto will move next. For the share price to take off though, we want to see the overall market boom. That said, let’s take a look at the iron ore price ― the main contributor to Rio Tinto’s earnings:
The iron ore price has traded sideways for months, despite being volatile. There’s little indication whether the price will move higher or lower in the future. That said, iron ore is trading around the August high and that has reflected in Rio Tinto’s share price. In that case, given iron ore is the main source of Rio Tinto’s revenue, a stable iron ore price isn’t a bad thing.
The bottom line: Rio Tinto’s future is mainly dependent on the overall market today, rather than the iron ore price. But both look good this week, which have aided Rio Tinto’s recent share price bounce. We will track this story and analyse any future developments.
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