The S&P / ASX 200 Index (Index: ^AXJO) (ASX: XJO) has closed down 0.6% at 4,694.8, its lowest level since early January, and has now fallen more than 10% since May 14, and which qualifies as a 'correction'. Only the Financials sector posted a positive gain, while Materials was heavily sold off, losing 2.4% as the big miners were hammered.
Here's why these three stocks are hot right now.
Lynas Corporation (ASX:LYC) dropped 9.1% to close at 45 cents, after the rare earths producer reportedly set a minimum price schedule for its products. According to The Australian, current spot prices of rare earths are around 25% below the minimum sustainable level for producers. Just last week Lynas announced that it was cutting operating costs and optimising production at a lower level, because the market was subdued.
Fairfax Media (ASX:FXJ) lost 4.6%, ending at 51.5 cents. Currently one of the most shorted stocks on the ASX, it appears that many traders are expecting more bad news when the company reports its full year results later this year. And that's after the company already announced that earnings in the second half of the 2013 financial year are expected to fall by 39%. Newspaper sales continue to fall, and the recently announced paywalls for the online news sites only come into effect in the 2014 financial year.
Fortescue Metals Group (ASX:FMG) slumped to $3.17, losing 3.4%, as resources companies continue to be heavily sold off. While the iron ore price remains around U$110 a tonne, market expectations are for further falls, as new supply comes online, and demand from Chinese steel producers slows. Fortescue is still in the process of selling off a minority share of some of its infrastructure assets, which could give it a boost, as the company looks to cut its debt burden.
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More reading
- Spotlight on Fortescue
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- Why is Westpac up 2% today?
- Three small cap stocks with huge dividend yields
Motley Fool writer/analyst Mike King owns shares in Fairfax.
