The S&P/ASX 200 Index (ASX: XJO) looks set for another wild day of trading this Wednesday. The ASX 200 took a pretty big dive this morning but has since stabilised at around 7,040 points at the time of writing, down by 0.11% so far today. But it’s the Fortescue Metals Group Limited (ASX: FMG) share price that has shown far more volatility than the broader markets today.
Fortescue shares are currently trading at $19.20 each, up a pleasing 0.5% so far today. But that comes after the mining giant closed at $19.11 yesterday and opened at $19.45 this morning. What’s more, soon after market open, Fortescue took a dive all the way down to $18.87 a share (a fall close to 3%). But that was only for the miner to recover to its current level. What a rollercoaster of a ride.
So what could be behind this dramatic rebound for Fortescue shares?
Why has the Fortescue share price bounced back today?
Well, we can’t be absolutely certain but it’s possible that it is a rebound in the price of iron ore itself that could be to thank. According to reporting in The Australian today, iron ore futures have rebounded to back over US$130 a tonne, up close to 3% from yesterday.
Iron ore, alongside many commodities, had taken a big dive over the start of the week over recession concerns coming out of the US. We also saw falls in oil and gold prices too.
Fortescue is almost a pure-play iron ore miner at this point. That means its fortunes tend to ride or die on the price of iron ore itself. Thus, any pricing movements in the iron market can have big consequences for Fortescue’s business. That’s why moves like the one we’ve just discussed can cause swings in the value of Fortescue shares.