It has been a shaky start for the ASX this week. Today, the ASX dipped by 0.6% at the time of writing this piece. RBNZ’s rate hike seems to have triggered a shift in momentum which has resulted in the banks and travel stocks taking the hit.
A2 Milk shares were the worst performing today as the stocks dipped over 7%, while CBA dropped by 2%. Travel stocks Webjet and Flight Centre have each dropped by over 6%.
All the volatility began in September as iron ore prices plunged on weak Chinese steel production data. Now, it looks like the weakness in the markets continues. Some of the best blue chip stocks on the ASX endured a September to forget and it may have brought on a buying opportunity.
Fortescue Metals Group (ASX: FMG) is the largest pure play iron ore producer in Australia. The company owns and operates the Chichester Hub and the Solomon Hub located in the Hamersley ranges of Pilbara, Western Australia.
FMG shares is one of the best dividend stocks on the ASX. As iron ore prices hit record levels earlier this year, FMG doubled their profits and recorded arguably their best operating year.
In the past few weeks however, FMG shares have endured a 30% decline as iron ore prices have crashed from the high of over US$200 a tonne to US$110 a tonne at the time of writing this piece. Slowing demand for iron ore as China is set on curbing steel production has been the root cause for the crash in iron ore prices. FMG shares as a result have crashed during this time given how correlated FMG shares are to iron ore prices.
FMG shares have declined by 24% in the past month and is one of the worst performing stocks on the ASX. At current prices of $14.18, FMG shares come with a dividend yield of 25%.
BHP Group is arguably the most well-diversified mining and exploration company there is. It is a part of every investor’s portfolio for different reasons – maybe for the stable dividends, or to decrease the overall volatility of the portfolio. BHP shares are also one of the best blue-chip stocks that trade on the ASX.
However, the BHP share price has come under significant pressure last month. One of the causes is further weakness in the iron ore price after curtailed steel production in China hit demand for the base metal. Not only BHP experienced such a pullback, but other mining giants also went through the same ride.
Another reason is concerns about the troubled property giant Evergrande. Evergrande is China’s largest property firm and hence is a huge steel consumer. The ASX has bucked a good lead from the US as investors look for confirmation that Evergrande paid a $US83.5 million interest payment on Thursday. Evergrande pledged it would. Although some investors say they are yet to see the evidence. The Chinese giant is struggling to pay about $418 billion in debts and investors fear a collapse could reverberate around the world.
BHP shares have continued to slide and it now trades at $36.65 a share. With a dividend yield of 10%, it remains a top quality dividend stock on the ASX.
Another mining giant, Rio Tinto is also affected by the weakness in the iron ore sector. Rio Tinto is a global powerhouse that is second in global size, behind only BHP. The firm is dual listed on the ASX and London’s LSE. Rio operates across commodities such as Aluminium, Copper & Diamonds, Energy & Minerals, and Iron Ore.
Despite stellar results and strong dividends in FY21, Rio shares have plunged for much of the same reason as that of FMG and BHP. The markets seem to have overlooked the fact that Rio Tinto is well diversified across several commodities. The share price continues to be weak as iron ore plunges. Evergrande’s mess has created more havor for companies exposed to commodities required in the infrastructure sector.
While Rio remains a top quality company operating at a high level, the share price weakness continues. Rio shares have dipped over 23% in the past 3 months and 12% in the past month. Currently trading at $96.55 a share, it has been one of the worst performers during September.
Regis Resources is a mineral exploration and production company. They engage in the exploration, evaluation and development of gold projects. Regis operates through Duketon North Operations, Duketon South Operations, and Tropicana.
The Duketon North Operations segment comprises Moolart Well, Gloster, Anchor and Dogbolter. The Duketon South Operations segment engages in incorporating Garden Well, Rosemont, Erlistoun and Tooheys Well. The Tropicana segment includes Tropicana, Havana and Boston Shaker open-pits and the Boston Shaker underground.
Regis share price has come off from the highs seen a year ago. It has gone from close to $5 a share to $2.13 a share. In the past month alone, Regis shares have declined by 11%. The weakness in gold prices has been a trigger. Gold prices cannot seem to catch a break and it continues to face negative momentum. Additionally, there have been concerns surrounding Regis’ McPhillamys Gold Project.
Given the performance, Regis is one of the worst performing stocks on the ASX in September.
Mineral Resources is an $8 billion company on the ASX that was performing extremely well in 2021. The stock price was on a positive trend up until late August and MIN shares had reached an all time high of $65. Since then, MIN shares have been dropping – taking the 1 month loss to over 20%.
Mineral Resources offers services such as contract crushing, infrastructure, and recovery of base metals concentrate. Collapsing iron ore prices has once again been the trigger here. Mineral Resources mines for low grade ore and therefore the problems have been multiplied given it has been impacted more.
This has made MIN shares one of the worst performers on the ASX for the month of September.