What’s happening: Shares of BHP Billiton Limited (ASX: BHP) have started the week on a high note after a strong rebound in oil prices and a stabilising iron ore price. The mining heavyweight rallied $1.13 or 4.2% to be trading at $28.18 per share, helping the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) to rise 1.2%.
Why it’s happening: The miner has come under enormous pressure in recent months as a result of the collapsing iron ore and oil prices. Indeed, the two commodities account for the majority of BHP Billiton’s overall earnings and with both sitting near multi-year lows, even the miner’s progressive dividend policy has been put under the microscope recently.
However, the oil price surged 5% late last week, recording its first weekly increase since November, after the International Energy Agency predicted lower supplies from non-OPEC countries including the Unites States, Canada and Russia. This enabled a sense of optimism within the market that the sector may be closer to resolving its oversupply problem which would pave the way for a recovery in prices.
In addition, according to data provided by the Metal Bulletin Ltd, iron ore is now changing hands for US$68.61 per tonne. Although it retreated by 2c, it seems the price could be stabilising for now with Chinese ports expected to continue restocking inventory in the near-term, providing a temporary sense of relief for those exposed to the sector.
Investors will receive more clarity on the situation when BHP Billiton releases its second-quarter production report on Wednesday.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned. You can follow Ryan on Twitter @ASXvalueinvest.
- Coronavirus (COVID-19): 6 charts every Australian needs to see – April 6, 2020 1:46pm
- Innovation through crisis – April 2, 2020 11:48am
- Coronavirus (Covid-19): Why Is Italy’s Fatality Rate So Bad? – March 26, 2020 3:39pm