Shares of mining heavyweights BHP Billiton Limited (ASX: BHP) and Rio Tinto Limited (ASX: RIO) could be set for a strong performance today after their London-listed shares soared overnight.
In Europe, BHP's shares jumped an impressive 5.8%, reversing some of the damage inflicted on the stock over the last two sessions, while Rio Tinto's share price gained 5.5% in international trade as well.
The rally may have, in part, been sparked by recent comments from Janet Yellen, chair of the US Federal Reserve, who reiterated a 'cautious' approach to hiking interest rates in 2016. Speculation of potential consolidation in the mining industry may have also played a role, according to The Australian Financial Review.
As is the case with the pair's locally-listed shares, Rio Tinto's and BHP's London shares have been hit hard in recent years as a result of the commodities downturn. They have rebounded somewhat in recent weeks thanks to a surprise uplift in iron ore and oil prices, but remain 54% and 66% lower over the last five years, respectively.
Of course, there is a chance that BHP's and Rio Tinto's shares won't experience the same kind of returns as they did in London overnight. To begin with, commodity prices are once again retreating, including a 1.7% decline in the iron ore price overnight to US$54.18 a tonne, according to The Metal Bulletin.
Although it remains well above its lows from December 2015, there is reason to suggest that is based mostly on temporary factors with the industry's fundamentals remaining weak due to significant oversupply coupled with waning demand.
