The iron ore complex was hit hard yesterday with FMG -4.4% the weakest of the majors although RIO -2.1% and BHP -1.8% were still caught in the downdraft, however, the bulk commodity ended the day largely unchanged. China arguably remains Trumps main focus, he just started his tariff campaign with weaker targets to test the waters, the overnight negotiations with Mexico make this move appear prudent. Tech giant Apple Inc saw its shares fall ~3.4% on Monday after Trump announced 10% tariffs on China, where the company assembles the majority of its products, moves like this suggest large investors are worried – to us 10% is a win, what comes next is the concern, and opportunity.
Iron stocks endured a tough 2024 and sentiment is poor with investors still happy to avoid the sector due to Chinas fragile economy and increased global supply – at MM we believe the markets too negative. However, we aren’t planning to increase our exposure at current levels but if we see a bad week of Trump v Jinping negotiations increasing our exposure is most definitely on the cards.
- We see great value in FMG if it retests, or dips below $16; remember to “buy the dip” this year – MM already owns Fortescue in our Active Income Portfolio.
MM is long and bullish FMG
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