The Aussie market is looking at a small gain this morning after an inconclusive trading session on Wall Street overnight ahead of the Fed’s post meeting statement’s release.
But another crunching for iron ore overnight will damage the sector this morning, especially the price of Fortescue Metals (FMG) shares, which has been forced to make a significant change to its $US2.5 billion refunding.
The overnight share price futures contract was up four points, but those gains will vanish because of the slide in iron ore, as well as another weak night for gold and oil.
Iron ore slumped 3.3% to $US56.95 per tonne overnight, undoing the gains of the past few days and that fall will whack the share prices of iron ore companies, starting with Fortescue.
Oil ended lower for a sixth successive session. US West Texas crude futures fell lost 42 cents, or 1%, to settle at $US43.46 a barrel in New York, the lowest since March, 2009. US crude prices are now down 13% in the past six trading sessions.
In London, Brent crude futures fell 43 cents, or 0.8%, to end at $US53.51 barrel. And gold fell to a new four month low of just over $US1,148 an ounce on Comex in New York.
And the Aussie dollar dipped to 76.16 after the Reserve Bank’s board meeting minutes revealed a strong hint for more rate cuts from the central bank.
Fortescue shares lost 1.9% to $1.97 yesterday after scrapping a planned $3.3 billion loan raising and instead, looking will look to raise that debt by selling bonds.
FMG 1Y – Fortescue launches new bond offer
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Among the other miners, Rio Tinto gained 0.2% per cent to $57.84, Mount Gibson shares jumped 6.9% to 23¢, and BC Iron shares rose 3.8% per cent to 40¢. Those gains will come under pressure this morning.
As will BHP Billiton shares which rose 1.2% yesterday to $29.77 on details of the spin off of a group os assets in a new company called South32.
The benchmark iron ore price was $US58.90 on Tuesday morning, this morning its almost $US2 a tonne cheaper.
Analysts at UBS estimates Fortescue’s cash break even price to be $US57 a tonne, so theoretically it is now underwater.
Wall Street finished on a very mixed note – the Dow suffered a triple-digit loss, down 128 points to 17,849.01. Nasdaq closed modestly higher, up 7.93 points, or 0.2%, at 4,937.43, and the S&P 500 closed 6.99 points or 0.3%, lower at 2,074.20. Investors were wary ahead of the ending of the two day Fed meeting and the subsequent statement and media conference by Fed chair, Janet Yellen.
