The Fortescue Ltd (ASX: FMG) share price has jumped 22% in just one month, significantly outperforming the S&P/ASX 200 Index (ASX: XJO), which has risen 2.6% in the same time period.
The ASX mining share has benefited from a significant increase in investor optimism about the resources sector.
With such a rapid rise, investors may be wondering if this is the right time to invest or whether the gains have already occurred.
One expert has shared their view on the situation and whether the Fortescue share price is attractive today.
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Take profits off the table
Writing on The Bull, Peter Day from Sequoia Wealth Management called Fortescue shares a sell on 7 October 2024.
He noted that the market had been hoping for more stimulus in China. However, he cautioned:
…we remain cautious as to whether more stimulus will increase demand for steel and its inputs.
The Fortescue share price has already dropped 5% since 7 October, so arguably, Day has already been proven right.
Looking at the consensus of analyst opinions (as per Factset), there are three buy ratings on the ASX iron ore share, eight hold ratings and six sell ratings.
In other words, analysts are overall a bit more negative than positive on the ASX mining share.
Latest stimulus disappoints
In the last week of September, China announced a number of measures that could help the economy. One of those measures included lowering the interest rate for existing mortgages. Another measure announced by China was to reduce how much money Chinese banks need to hold in reserve, which will unlock a significant sum that can be lent out.
However, investors had been anticipating further stimulus earlier this week, but there was a "lack of specific plans to bolster" the Chinese economy, according to reporting by various media outlets, including Reuters.
Chairman of the National Development and Reform Commission (NDRC), Zheng Shanjie, reportedly said that the Chinese government planned to issue US$28.3 billion in advance budget spending and investment projects from next year.
Zheng also said that China will try to boost domestic demand and enhance people's livelihoods by stimulating consumption and investment, according to Reuters.
Reuters also reported on comments from Christopher Wong, currency strategist at OCBC, who said:
So far, the NDRC press conference appears to run short on details with regards to stimulus measures. Hopes were raised, but the delivery was disappointing.
Trading Economics is currently forecasting that the iron ore price could decrease to approximately US$87 per tonne in 12 months. If that happened, I think it would be a negative for Fortescue shares.
Fortescue share price snapshot
Since the start of 2024, the Fortescue share price has dropped by around 34%. However, it's only down by 7% in the past year.
