The Rio Tinto Limited (ASX: RIO) share price is tumbling as the broader market reacts to the United States Federal Reserve raising interest rates by another 0.75%.
Rio Tinto shares are down 2.46% to $90.35 at the time of writing, while the S&P/ASX 200 Index (ASX: XJO) is down 1.73%.
The S&P/ASX 200 Materials (ASX: XMJ) is the worst-performing sector index today, down 2.8%.
Rio shares aren't alone in the turmoil. Fellow big players among the ASX iron ore shares are also down.
The Fortescue Metals Group Limited (ASX: FMG) share price is 2.7% in the red at $15.30. The BHP Group Ltd (ASX: BHP) share price is down 3% to $38.05.
Let's take a look at what's happening.
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ASX resources shares hit by triple whammy
So, there are three elements likely weighing on ASX resources stocks like Rio Tinto today.
First of all, the whole market isn't liking the fourth consecutive 0.75% increase in US interest rates.
US rates are now at their highest level since the global financial crisis in 2008.
The ASX 200 also isn't reacting well to US Fed chair Jerome Powell saying interest rates may go higher than expected.
In his statement, Powell said: "… incoming data since our last meeting suggest that the ultimate level of interest rates will be higher than previously expected".
The second hit to resources stocks relates to the continuing fall in the iron ore price.
It went below US$80 per tonne this week for the first time since April 2020. The iron ore price has fallen by almost 17% in the past month alone, according to Trading Economics data.
The commodity's value is dropping on fears of a global recession and lowering demand from China.
The third hit comes in the form of downgraded earnings estimates for iron ore miners from broker Citi.
According to reporting in The Australian, Citi has reduced its earnings estimate for iron ore miners. This is in response to Citi's global commodities team cutting its forecasts for the iron ore price.
Previously, the Citi commodities team had been forecasting an average price of US$110 per tonne in 2023. It has now reduced its outlook to an average of US$95 per tonne.
The broker also tips the spot price to fall to US$70 per tonne in the December quarter.
Citi's Paul McTaggart said:
The recent heavy sell-off in iron ore has seen prices fall to their lowest levels since 2020, as sentiment deteriorated post China's 20th Communist Party Congress.
We've become more cautious on iron ore over the next six months reflecting the disappointing policy environment post the Congress.
In our base case, we expect some existing policy support could take effect under the new China leadership with the expectations that there would be better coordination within different government levels to improve overall executions. However, we are likely only going to see this happens after the March quarter.
… mining share prices have retreated as iron ore has moved lower. That said, we now see iron ore cost curve support and China's imports of iron ore from non-major suppliers have contracted back to historic lows.
If our baseline economic forecasts prove correct, we now have an attractive entry point for key stocks.
Citi says the Rio Tinto share price is a buy
Citi has retained its buy rating on Rio but has cut its CY23 earnings per share (EPS) estimate by 16%.
The Rio Tinto share price is currently down 9.4% in the year to date.
