Morning Report Friday 7 November 2014
Iron Ore continues to make 5 year lows, will stocks follow or bounce from here?Last night Iron Ore fell 1.4% as Nourei Roubini, the Chairman of Roubini Economics, called Chinese growth to slump past 5.5%. In my opinion, well beloq the target prices currently suggested for equities and commodities. However, I have been targeting Fortescue (FMG) to fall under $3 and this could potentially provide a trading opportunity. These levels are likely to be reached today so do we pull the pin? What does concern me in the bigger picture is how well our Iron Ore stocks have performed compared to their international competitors, I assume investors are factoring in a significantly lower $A to their valuations. For example - Vale, the world’s largest Iron Ore producer, is pluming levels not seen since 2005 whereas the main 3 Australian producers are still trading approximately double the corresponding levels.
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