Don’t look to equity markets for rationality. There ain’t none. Not today anyway. The news flow for iron ore is dreadful with Vale’s price, profit and inventory shocker and a downgradeto $70 today for the price outlook from Morningstar (though rather stupidly not until 2017, two years too late) and big equity price falls in London overnight to boot. There’s not much help in Dalian, either. But stuff that, BHP and RIO are pouring it on, up 1% apiece and Fortescue is firm.
Perhaps there’s some global rotation out of Vale and into the locals, which makes no sense given Vale showed how screwed the whole sector is. Perhaps the inebriated 20-somethings that run the market wrongly think Vale is the bottom. Perhaps they laugh that London deserves a good caning. Perhaps they reckon Morningstar is staffed with dills. Perhaps they’re drunk.
I can only register my view that once again the mining-addled ASX is wrongly bidding up when it should discounting risk!
