Why BHP Billiton’s Share Price Could Fall to $28

At the time of writing, shares of BHP Billiton Ltd [ASX:BHP] are down by 1.92%, to $31.22 per share.

Why did BHP Billiton Ltd shares do this?

BHP Billiton is considered a leading company and tends to move with the overall market. That makes sense. The ASX 200 Index is trading slightly lower today, down 23.4 points to 5,645 points:

bhp commsec
Source: Commsec

I’m surprised our market isn’t trading even lower today. The US Dow Jones Industrials Index dropped 3.10%, or 799.36 points, to end at 25,027 overnight. The Aussie market is holding up relatively well, considering. So is BHP Billiton’s share price. But I don’t think the current market correction is over. The above chart seems like cracking lower. That’s probably not good for BHP Billiton’s share price in the short term.

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What now for BHP Billiton Ltd?

The ASX 200 has been in freefall towards 5,600 ― a price target that dates back to the July 2016 high point. I suspect the market might hold up around this level. But there’s always a chance it will move lower. If that happens, we could see 5,000 points. That’s why BHP Billiton’s share price could revisit old lows:

BHP trading view
Source: Commsec

Reviewing the tea leaves, I believe $28 is the major target for traders. It’s worth noting the share price is holding up and probably won’t get there overnight. It really depends on the overall market.

That said, the iron ore price ― a large contributor to BHP Billiton’s earnings ― isn’t looking good either:

Source: tradingview.com

The iron ore price dropped sharply late last month. BHP Billiton’s share price held up relatively well, considering. That said, while it might bounce slightly in the weeks ahead, iron ore is still holding up at the moment. In that case, given iron ore is a large source of BHP Billiton’s revenue, the share price could be supported even if the market drops lower.

The bottom line: BHP Billiton looks like it could hit $28 per share. The company’s future is mainly dependent on the overall market today, rather than the iron ore price. But, given the fact that it’s holding up, the iron ore price could offer some support for the company’s share price.

Jason Stevenson,
Resources Analyst, Markets & Money

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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:

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