The extraordinary rally in commodities is being driven both by fundamentals and speculation, but experts are divided as to its sustainability. The last time Fortescue Metals Group shares traded above $6 a share five years ago, iron ore was selling at close to $US120 a tonne, well above the current price of $US75 a tonne. The roaring return for Australian mining stocks has outpaced the recovery of their respective commodities.
Driving investors into the stocks is a heady combination of Chinese fiscal and monetary stimulus supporting demand for steel, optimism that President-elect Donald Trump will push through infrastructure spending quickly, and a return to favour in the value end of the market, in which resources sector sits........................................Full Article: Source
|