ASX 200 hits 5,944: tech stumbles, mining stocks rise on Monday

We examine the important market moves from Monday, Citi’s take on FMG, and the key data releases investors may want to watch out for over the next week.

ASX 200 wrap: key market moves from Monday

It proved to be a volatile day for the ASX 200: in the opening hours of trade the blue-chip index dropped, falling to an intraday low of 5,881 points. The benchmark however recovered as we moved into the afternoon session, eventually closing out the day up 1.9 points or 0.05%, at the 5,944 point level.

The materials sector was by far the best performing for the day, with the likes of FMG, BHP and RIO all finishing the day in positive territory.

Financial stocks also managed to claw back some of their early losses, with ANZ rising 1.17%, CBA adding 1.11%, NAB eking out a 0.54% gain and WBC creeping up 0.50%.

By comparison, information technology and industrial stocks were some of the worst performing, with the likes of Wisetech and Altium witnessing significant price declines. ASX darling Afterpay also saw its share price decline.

Elsewhere, the Mesoblast share price crashed 10.14% on Monday, to finish out the session at $3.72 per share.

Why Citi still sees downside in the FMG share price

Even as Fortescue Metals Group (FMG) continues to defy the sceptics – with its share price rising ~200% in the last two years – Citi analysts remain bearish on the stock.

Overall, in a note released today, Citi argued that it appears difficult to see how iron ore price won’t trend lower over time; adding that the small distinctions in long-term iron ore price forecasts are mostly ‘academic’ diversions.

With a Q4 CY21 base-case iron ore price forecast of US$62 per tonne, Citi analysts posit that FMG’s ‘earnings and dividends seem to be at risk’ with it further being added that ‘We believe FMG's share price recently has run ahead of our underlying valuation.’

In line with the above, Citi currently has a Sell recommendation and a price target of $11.70 on the pure-play iron ore miner.

Events for investors to watch out for

Looking forward, Collins Foods (CKF) is set to reveal its full-year results on Tuesday; while TPG Telecom (TPG) is also set to trade ex-dividend on Tuesday.

Elsewhere, it’s poised to be a moderately slow week in terms of economic data releases: preliminary trade in goods – import and export data (May) is set to be released on Tuesday; skilled vacancy data (May) will be released on Wednesday; and job vacancy data (May) and financial accounts data (Q1) will be released on Thursday.

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