BHP Billiton Limited (ASX: BHP) is trading almost 4% higher than they were on Monday, with its shares currently priced at $38.23. The mining giant's rally this week will come as a relief for investors who have again watched their shares underperform the broader S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) since the beginning of the year.
Here are three likely reasons why BHP Billiton has jumped this week:
1. Iron ore has been a key concern for investors so far in 2014 with the commodity's price having plummeted over 20% since the beginning of January. However, it seems to have stabilised slightly which offers investors a sigh of relief. It traded marginally higher overnight at US$103 a tonne. Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG) have also jumped 3.8% and 1.3% respectively since Monday.
2. Nickel, on the other hand, has skyrocketed 50% in 2014 thanks to Indonesia's ban on raw material exports. It gained 5.1% on Monday to record its biggest one day jump in nearly two years. While nickel is considered to be one of BHP Billiton's non-core assets, the strengthening price will help boost the appeal of its nickel assets which it is eager to sell. Shares in nickel miners such as Western Areas Limited (ASX: WSA) and Sirius Resources NL (ASX: SIR) have also jumped over the last few days.
3. Although Chinese industrial production and retail sales for April were slightly lower than anticipated, the market reacted positively based on the government's latest commitments to market reforms. This will help to deter corporate defaults.
A better bet than BHP Billiton
BHP Billiton is my favourite mining stock due to its long-term direction and high level of diversification. However, at today's price I believe there are better alternatives for your hard-earned investment dollars.
