S&P/ASX 200 Index (ASX: XJO) iron ore stocks are delivering some divergent results today.
In morning trade on Tuesday, the ASX 200 is up 0.9%.
Here's how the big three ASX 200 iron ore stocks are faring at this same time:
- Fortescue Metals Group Ltd (ASX: FMG) shares are down 4.4%
- BHP Group Ltd (ASX: BHP) shares are up 0.7%
- Rio Tinto Ltd (ASX: RIO) shares are up 1.2%
So, what's going on?
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ASX 200 iron ore stocks shrug off Chinese headwinds
Rio Tinto and BHP shares are shrugging off headwinds today thrown up by a retrace in the prices of their top earning metals.
The Fortescue share price look to be coming under selling pressure amid news that 50.3 million shares were sold in a block trade at a price of $21.60 per share. That's 6.0% below yesterday's closing price of $22.98 a share.
On the metals front, iron ore declined 2.1% overnight to trade for just over US$105 per tonne. Even hot-running copper slipped, with the red metal down 0.8% to US$9,666 per tonne.
BHP and Rio Tinto shares saw their internationally listed stocks slide overnight. The BHP share price closed down 1.0% on the New York Stock Exchange (NYSE), while Rio Tinto shares fell 0.8%. But Aussie investors aren't following their US counterparts in selling the ASX 200 iron ore stocks today.
This week's industrial metals' price decline looks to be linked to ongoing weakness in China's economic recovery.
Yesterday, China's National Bureau of Statistics released a trove of data, most of which fell short of analyst expectations.
While industrial production in the world's number two economy was up 5.6% year on year, it was down from April, coming in below the median forecast of a Bloomberg survey.
And China's steel-hungry property markets showed ongoing signs of weakness, with real estate investment and house prices falling again in April.
What are the experts saying?
Commenting on the disappointing Chinese data that could throw up headwinds for ASX 200 iron ore stocks down the road, Jacqueline Rong, chief China economist at BNP Paribas said (quoted by Bloomberg), "The most disappointing in May's data is probably that property sales barely saw any improvements even after so many supportive measures."
Indeed, this has seen numerous economists call for more government stimulus measures to get the economy back up to speed.
"We still need to see new stimulus coming in. Otherwise, the growth momentum could very much weaken," Helen Qiao, chief Greater China economist at Bank of America Global Research said.
More fiscal support may be in the pipeline. But ASX 200 iron ore stocks will likely be waiting a while for monetary easing with China's government wary of further devaluing the yuan against the greenback.
According to Bloomberg economists Chang Shu and David Qu:
Policy support could make a significant difference. But the People's Bank of China's focus on currency stability appears to have tied its hands on cutting interest rates, at least until the Federal Reserve moves.
Stay tuned!
