Iron ore miners fall on ASX as Trump plans tariff on China
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The news: Iron ore miners fell in early trading on the ASX after new US President Donald Trump said he was planning a tariff on China by as soon as 1 February.
The numbers: BHP shares are down 1.65% to $39.94 in early trading on Wednesday while peers Fortescue (-1.42%) and Rio Tinto (-0.63%) along with BlueScope Steel (-0.9%) also fell.
Earlier today, Trump announced plans for a 10% tariff on China while he unveiled a USD500 billion ($797 billion) investment in AI infrastructure at the White House.
The context: Meanwhile, analysts maintained their bullish outlook on BHP after the mining giant reported higher production for the second quarter and reaffirmed full-year production guidance at most of its assets.
BHP reported a 10% increase in first-half copper production on Tuesday, boosted by a 22% rise at its Escondida mine in Chile, while iron ore production was up 1% from a year ago.
Morningstar analyst Jon Mills kept his $40 fair value estimate on BHP shares, saying the performance was in line with expectations and the company reiterating cost and production guidance.
Macquarie analysts also kept their ‘outperform’ rating on the stock along with a $42 price target, despite trimming earnings estimates slightly due to higher expected costs and lower production but helped by quarterly copper production ahead of expectations.
Goldman Sachs analysts reaffirmed a ‘buy’ rating on the stock and a $46.80 price target citing superior margins to peers, potential for higher capex, and a bullish outlook on copper along with BHP’s major opportunity to grow production for the commodity.
The sources: Morningstar research, Macquarie research, Goldman Sachs research
