MENU

ASX shares fall, iron ore stocks hammered

The S&P/ASX 200 index (Index: ^AXJO) has closed down 0.5%, after iron ore prices fell below US$100 a tonne overnight, dragging down resources stocks.

The continued rise of the Australian dollar versus the greenback, currently just under US 105 cents, has also seen many companies with overseas earnings sold off.

These three stocks were slammed, due to exposure to either iron ore or coal.

Fortescue Metals Group Limited (ASX: FMG) shares have slumped 14% to $2.99, after Fairfax media reported that the company had asked its lenders to waive all debt covenants for the next 12 months.

If the banks decline, the Fortescue could be unable to draw down on its existing lines of debt, and may be forced to raise equity (as we suggested last week) at a deep discount to the current share price. Another option for the company may be an injection of equity from Chinese companies looking to guarantee a cheap source of iron ore for the long-term.

Arrium Limited (ASX: ARI) — ex OneSteel, shares crashed 11% to 52 cents. Having changed its spots from a steel producer to an iron ore miner, the company appears to have jumped from the frying pan into the fire — as we also warned in February. With iron ore prices falling so dramatically over the past few months, the company could find itself a similar boat to Fortescue, and forced to raise equity at a low point in the cycle.

Shares in Atlas Iron Limited (ASX: AGO) have fallen 6% to close at $1.47. As one of Australia’s up-and-coming iron ore producers, Atlas has higher costs of production that the big miners like Rio Tinto Limited (ASX: RIO), Brazilian giant Vale and BHP Billiton (ASX: BHP). Recent falls in the iron ore price put its margins at risk.

The Foolish bottom line

All eyes will be on the US Federal Open Market Committee (FOMC) tonight our time, with market expectations that we will see another round of quantitative easing, or QE 3 as it’s known, to try and kick-start some growth in the US economy.

If you’re in the market for some high yielding ASX shares, look no further than our “Secure Your Future with 3 Rock-Solid Dividend Stocks” report. In this free report, we’ve put together our best ideas for investors who are looking for solid companies with high dividends and good growth potential. Click here now to find out the names of our three favourite income ideas. But hurry – the report is free for only a limited time.

More reading

Motley Fool writer/analyst Mike King owns shares in BHP. The Motley Fool’s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Top 3 ASX Blue Chips To Buy For 2019

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked…

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of The Motley Fool’s Top 3 Blue Chip Stocks for 2019.

Each one pays a fully franked dividend. The names of these Top 3 ASX Blue Chips are included in a specially prepared FREE report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

See the 3 blue chip stocks

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.