The share prices of Fortescue Metals Group Limited (ASX: FMG) and South32 Ltd (ASX: S32) are both up more than 5% due to a trade war truce between the US and China.
Fortescue is the fourth largest iron ore producer in the world and South32 is a $16 billion miner of manganese ore, a major producer of silver and one of the world’s largest ferronickel producers.
Demand for the products of both companies is heavily influenced by global trade and infrastructure spending.
The end of the trade war?
US President Donald Trump and China have been at loggerheads over trade practices, intellectual property and tariffs.
However, the implementation of the US threat to increase existing tariffs from 10% to 25% on US$250 billion goods has been suspended for 90 days.
As part of the deal, China will purchase a large amount of agricultural, energy, industrial and other products from the US.
However, to remove the current 10% tariffs China would need to work on cyber intrusions & theft, intellectual property protection and mandatory technology transfers.
Australian resource businesses rely on global trade to maintain & increase demand for the materials produced. Other ASX share price gains include BHP Billiton Limited (ASX: BHP) shares rising 3.3% and Rio Tinto Limited (ASX: RIO) shares rising 2%.
For investors, this type of news and share price reactions serve as a reminder that mining and resources shares can be very volatile, unlike other ASX dividend shares that araffected effected by tariffs…
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
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