The S&P/ASX 200 index was down 1.3% or 77.6 points early on the back of heavy losses on Wall Street after the Federal Reserve warned inflation fears would likely lead to yet another interest rate cut and oil prices soared to a record close of $US133.17 a barrel overnight.
However in afternoon trade, the S&P/ASX 200 index rebounded closing the day 3.5 points higher at 5826.9 on the back of a surge in mining stocks.
BHP Billiton and Rio Tinto both staged afternoon fight backs. BHP – which hit a low of $A46.05 – closed the day 83c higher at $47.70, while Rio closed up 96c to $151.01 after hitting a low of $146.02.
Australia’s third-largest iron ore supplier Fortescue Metals Group also rebounded today from a low of $8.91 to close the day up 46c (5%) to $9.70 on news that Sinosteel hasn’t ruled out taking up a stake in the company, Sinosteel president Huang Tianwen told Reuters on the sidelines of an industry conference.
However, Huang denied that Sinosteel was looking to snap up a stake in BHP with Chinese state-owned partners.
“[Sinosteel] does not participate in such unified activities,” he said.
Today’s news comes after UBS analysts told Dow Jones that ArcelorMittal’s purchase of a stake in Macarthur Coal could trigger further consolidation with steelmakers targeting more Australian miners to guarantee supply.
“We expect there to be further consolidation within the sector as steel producers globally recognise the increasing importance of securing supplies of iron ore, coal and manganese,” UBS said.
UBS suggested stocks that may be affected included Mt Gibson Iron, Murchison Metals, BC Iron, Atlas Group, Brockman Resources and (surprise, surprise) FMG.
On the precious metals front, spot gold was trading $US2.1 higher at $933.9 an ounce at 4.46pm EST.
On the London Metal Exchange, the bulk of base metals closed lower again with three-month copper down $US85 to $8240 per tonne, zinc shedding 70c to $2205/t, nickel falling $800 to $25,200/t and lead down $23 to $2147/t. Three-month tin closed $575 higher at $24,250/t while aluminium closed $23 higher at $3020/t.
