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What’s the outlook for the FMG, BHP and Rio Tinto share prices?

Despite historically high iron ore prices, Australia’s big three miners – Fortescue Metals Group (FMG), BHP Group (BHP) and Rio Tinto (RIO) – posted mixed full and half-year results in August. Looking at the headline figure’s from the big three’s recent results release:

August earnings season in focus

Despite historically high iron ore prices, Australia’s big three miners – Fortescue Metals Group (FMG), BHP Group (BHP) and Rio Tinto (RIO) – posted mixed full and half-year results in August.

Looking at the headline figure’s from the big three’s recent results release:

  • FMG reported higher FY20 earnings (EBITDA) and profits (NPAT), while full-year dividends also climbed, coming in at 176 cents per share.
  • By comparison, BHP reported broad based declines, with earnings, profits and dividends all coming in lower in FY20.
  • Like BHP, RIO also witnessed declines over the half ending 30 June, reporting lower underlying earnings and EBITDA, as well as a diminished dividend of 155 US cents per share.

BHP’s Mike Henry described the miner’s results as reflecting the strength of the company; FMG’s Elizabeth Gaines emphasised the miner’s focus on ‘future growth and development’; while RIO’s J-S Jacque’s touted the agility and adaptability of his company.

Unsurprisingly, the share price performance of these three stocks has been equally diverse over the last month. Since 3 August, BHP has risen 3.11%, FMG eked out a gain of 0.4%, while RIO has seen its share price fall 3.89%.

This comes as iron ore prices continue to trade around multi-year highs – with CME’s iron ore September future’s contract currently trading at US$126.06 per tonne.

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How did analysts respond?

Below we survey how analysts responded – in terms of both ratings and price targets – in the immediate aftermath of Rio Tinto, FMG and BHP Group’s half and full-year results releases.

Rio Tinto share price outlook

Following the H1 release, analysts from Credit Suisse reiterated their Underperform rating and $86.00 price target on the miner, saying:

‘Whilst there has been a credibility hit on the back of Juukan and the findings are still to come, operationally the key revenue drivers are performing well and RIO continues to deliver incredibly healthy returns for its shareholders.’

Morgan Stanley cited a $91.50 price target and Equal-weight rating, while also describing the H1 as a:

‘Clean set of numbers from RIO with EBITDA 3% better than MS and consensus on better Ali, revenue and Copper costs.’

Maintaining an Outperform rating and $110.00 price target, analysts from Macquarie Wealth management noted that RIO’s:

‘Earnings result was mixed with a beat in earnings offset by weaker cash flow and a softer dividend payment. Production guidance and costs for CY20 remain unchanged and the key iron-ore projects remain on track.’

BHP share price outlook

Although Credit Suisse analysts described BHP’s FY20 results as ‘soft’, the investment bank, said:

‘Despite keeping the Neutral rating we still prefer BHP to RIO given the far greater optionality imbedded in the portfolio relatively in our view.’

Credit Suisse put a $37.00 price target on BHP following the FY20 release.

Unlike Credit Suisse, analysts from Macquarie Wealth Management remained constructive on BHP in the wake of its full-year report, reiterating an Outperform rating and $42.00 price target, with it being argued that:

‘Buoyant iron-ore prices underpin strong earnings upgrade momentum with a spot price scenario generating 35% and 70% higher earnings for FY21 and FY22 than our forecasts, respectively.’

By comparison, Morgan Stanley described the miner’s FY20 result as ‘slightly weak’, though reiterated an Overweight rating and $36.85 price target.

FMG share price outlook

Credit Suisse analysts downgraded their rating on FMG from Neutral to Underperform in the wake of the miner’s 2020 result, citing recent share price outperformance as the main driver of this decision. Even so, it was noted that the these full-year figures contained:

‘Yet another clean set of numbers with a strong dividend again providing the best yield for shareholders in our coverage universe.’

The investment bank has a 12-month price target of $15.00 per share on FMG.

Unlike Credit Suisse, Macquarie analysts remained bullish on FMG following its full-year report – reiterating an Outperform rating and $19.00 price target. The investment bank has favourably viewed the sector for some time now and took the chance to note that:

‘A spot price scenario generates 92% and 234% higher earnings than our forecasts for FY21 and FY22 and translates to free cash flow yields of 17-18%.’

Morgan Stanley appears the most bearish of the three brokers, assigning FMG an Equal-weight rating and $12.65 price target – implying substantial downside from current price levels.

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Industry News

School4Trading Review – How to Spot Possible Forex Broker Fraud

School4trading Review

School4Trading Review – How to Spot Possible Forex Broker Fraud

In this School4trading Review, we will look at the features of the software, as well as the customer support. First, let us look at the interface. The design is simple and easy to navigate. It also provides a chatbot, which helps you to communicate with the broker. The customer service is warm and inviting, which is a hallmark of a good broker. In contrast, a fraudulent broker will use cold and impersonal customer support to lure people in.

Another problem with the system is that the login process is not always intuitive. You may have to retype your password several times to get in. Then, you may experience difficulties withdrawing your funds or accessing your account. In such cases, you might have to wait for days or even weeks before you can withdraw the money you’ve invested. This is not a good sign. It’s better to choose a different trading platform altogether.

If you’re having trouble logging in, you should also check the legitimacy of the broker. Whether the broker is licensed by a reliable regulatory body or closed down, you’ll want to be sure it’s legitimate. If the broker isn’t licensed by the right body, don’t trust him. You shouldn’t waste your time with an inexperienced company. This will only cause you problems in the long run.

The next factor that should be checked is the licensing. A legitimate broker will have a license from a high regulatory body. However, a broker without a license will be unreliable. Moreover, a reliable regulator will take away the license of a scam broker. As a result, a trustworthy School4Broker/Profittrade review should mention fees, account rules, and contract terms. A scam broker will be unable to operate legally.

Secondly, look for warning signs. The broker should be licensed and regulated by a reliable regulatory body. It should be regulated by a high level. If it doesn’t, it’s a scam. Lastly, it should have a website that lets you easily access your account. Moreover, you should not hesitate to check the contact information. If you find any information that seems suspicious, you should reconsider using the broker.

In summary, Forex trading isn’t easy, but it doesn’t have to be complicated. It’s not as difficult as it seems if you’ve heard about the program. You’ll learn everything about the basics and how to become a professional. But if you’re still unsure about whether this program is right for you, don’t hesitate to contact a school4trading’s website.

The most important thing to remember when it comes to Forex trading is that it’s not easy. While it’s important to have a strong background in trading, there are a number of factors that can affect your success. Having a proper plan is vital in the long run, because you will be trading with real money. And, the platform should be reliable. Otherwise, you’ll end up losing a lot of money.

As we’ve mentioned, Forex is not easy. Investing isn’t something you can do in the comfort of your own home. You need a proven system. There are no free trials, so you’ll have to find a way to do it yourself. This isn’t a scam, and it’s a great way to make money without any help. A Forex system can help you learn the intricacies of the market.

Although the process of learning Forex isn’t an easy one, it’s certainly not impossible. Fortunately, there are many people who are willing to take the time to learn how to trade. But, even the most experienced trader needs to be aware of the risks of the market. While Forex trading isn’t easy, it can be done with the right knowledge. The software’s user-friendly interface is key.

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Daily Financial News

Don’t Count On JPY Correction; Staying Long GBP/JPY

The path of the potential pace of the JPY decline may still be underestimated by markets, which continue trading the JPY long.

While the 10% USDJPY advance from September lows looks impressive from a momentum point of view, it may no thave been driven by Japan’s institutional investors reducing their hedging ratios or Japan’s household sector reestablishing carry trades.

Instead, investors seemed to have been caught on the wrong foot, concerned about a sudden decline of risk appetite or the incoming US administration being focused on trade issues and not on spending. Spending requires funding and indeed the President-elect Trump’s team appears to be focused on funding. Here are a few examples: Reducing corporate taxation may pave the way for US corporates repatriating some of their USD2.6trn accumulated foreign profits. Cutting bank regulation could increase the risk-absorbing capacity within bank balance sheets. Hence, funding conditions – including for the sovereign – might generally ease. De-regulating the oil sector would help the trade balance, slowing the anticipated increase in the US current account deficit. The US current account deficit presently runs at 2.6% of GDP, which is below worrisome levels. Should the incoming government push for early trade restrictions, reaction (including Asian sovereigns reducing their holdings) could increase US funding costs, which runs against the interest of the Trump team.

Instead of counting on risk aversion to stop the JPY depreciation, we expect nominal yield differentials and the Fed moderately hiking rates to unleash capital outflows from Japan.The yield differential argumenthas become more compelling with the BoJ turning into yield curve managers. Via this policy move, rising inflation rates push JPY real rates and yields lower, which will weaken the JPY. Exhibit 12 shows how much Japan’s labor market conditions have tightened. A minor surge in corporate profitability may now be sufficient, pushing Japan wages up and implicity real yields lower.

JPY dynamics are diametrical to last year . Last year, the JGB’s “exhausted”yield curve left the BoJ without a tool to push real yields low enough to adequately address the weakened nominal GDP outlook. JPY remained artificially high at a time when the US opted for sharply lower real yields. USDJPY had to decline, triggering JPY bullish secondround effects via JPY-based financial institutions increasing their FX hedge ratios and Japan’s retail sector cutting its carry trade exposures. Now the opposite seems to be happening. The managed JGB curve suggests rising inflation expectations are driving Japan’s real yield lower. The Fed reluctantly hiking rates may keep risk appetite supported but increase USD hedging costs.Financial institutions reducinghedge ratios and Japan’s household sector piling back into the carry trade could provide secondround JPY weakening effects

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Daily Financial News

Mexico raises interest rates, cites Trump as risk

The head of Mexico’s central bank says U.S. Republican candidate Donald Trump represents a “hurricane” sized threat to Mexico.

Banco de Mexico Gov. Agustin Carstens told the Radio Formula network Friday that a Trump presidency “would be a hurricane and a particularly intense one if he fulfills what he has been saying in his campaign.”

Trump has proposed building a wall along the border and re-negotiating the North American Free Trade Agreement.

Mexico’s central bank raised its prime lending rate by half a percent to 4.75 percent Thursday, citing “nervousness surrounding the possible consequences of the U.S. elections, whose implications for Mexico could be particularly significant.”

Mexico’s peso had lost about 6 percent in value against the dollar since mid-August. It recovered slightly after the rate hike

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