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Why Fortescue Metals Group Limited surged 7% yesterday

What happened? Fortescue Metals Group Limited (ASX: FMG) shares jumped an incredible 7% yesterday to a high of $6.15, just 23 cents shy of the two-and-a-half-year high of $6.38 touched earlier in the month.

Why? Great question! There’s no obvious reason why the shares would surge – the iron ore price plunged 3.4% overnight, the oil price rose, the Australian dollar gained ground against the U.S., and there was no market-moving announcement from the company during the day.

In isolation these four factors would usually weigh on the share price of ASX-listed mining companies, however Fortescue and peers BHP Billiton Limited (ASX: BHP) and Rio Tinto Limited (ASX: RIO) all had strong days.

For what it’s worth, Fortescue and peers may have had a strong day due to signs that OPEC nations are nearing an agreement. Perhaps similar could happen in the iron ore market, or perhaps someone just thinks that China could continue to be a strong buyer of Australian iron ore for the foreseeable future… who knows?

What now? This is business as usual for mining companies and the stock market as a whole. We don’t expect it to act rationally at all times or otherwise we wouldn’t be able to take advantage of opportunities that the rest of the market misses.

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Motley Fool contributor Andrew Mudie has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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