Amid the coronavirus crisis, it's been sink or swim for ASX-listed stocks. Big and small caps alike have endured a turbulent month, and many remain unsure of their next move in the seventh-ever bear market.
At the top end of town, however, BHP shares have risen in recent weeks. The mining giant has overcome a substantial slump and things are looking up as it shrugs off the shock to Asian markets.
However, there's a lot of ground to cover. The coronavirus wiped roughly $15 from BHP's share price. But is a fortnight in the green enough to indicate the iron ore magnate is on the road to recovery?
A mid-season slump
While BHP stock is now on the rise, it's a change in tune from a turbulent summer.
In January, BHP shares began to dip. Constrained Chinese markets weighed on iron ore demand, putting the mining giant on the back foot. On February 3, shares were selling for $38.25, but the slump pulled them down to $25.20 just six weeks later.
The sudden price shed isn't unique to BHP. Importantly, many Aussie mining magnates experienced similar swings.
Rio Tinto stock went from a $105 2020 high to $80.62 low. Fortescue Metal shares lost a quarter of their value between late January and mid-March. Even S32 stock went south, plunging from $2.85 per share to just $1.79.
A change for the better?
However, as China began to shake off the COVID-19 curse, things began to turn around. Come mid-March, a critical low point for many mining giants, iron ore began to stage a comeback.
As China's factories started coming online, demand surged, and our iron ore stalwarts shook off the slump.
On Wednesday, Fiona Boal, Head of Commodities and Real Assets at S&P Dow Jones Indices, penned a review on how commodities had fared in recent months.
"The S&P GSCI Iron Ore continued to outperform, down only 0.2% for the month, benefiting from China restarting some of its manufacturing capacity," Fiona explained.
Even though the resurgence has begun, it hasn't always been smooth sailing. There's still been ups and downs across BHP's price board. But in the space of three weeks, stocks have gained $5 in ground and clinched a finish over $30. By the Easter weekend, BHP shares were trading for $31.50 each.
Increased dividend hopes
Materials shares may be staging a comeback as analysts remain confident mining giants are well-positioned to pay out their interim dividends.
"The majors with iron ore exposure should continue to pay healthy dividends, with yields well above those offered in other sectors and above that of the ASX100 on average," Macquarie banking analysts predict.
BHP is just one of the larger ASX-listers analysts believe are capable of substantial yields. It seems all eyes are on the big three as increasing iron ore stability positions them well for the future.
"The 12-month forward yield is three per cent for S32, seven per cent for BHP, eight per cent for RIO and 14 per cent for FMG," the investment bank predicts.
At April 9, the iron ore spot price was $82.87.
The bottom line
So, where will the BHP share price head next? If you're going by the current iron ore climate, signs say onwards and upwards.
As China's industrials continue to build momentum, iron ore demand will surge, placing Australian exporters well to respond. Increased demand, as well as dividend confidence, could be enough to keep the share price rising.
Despite this, the market is still turbulent. Collateral from overseas exchanges still threatens to undo a rare green run this autumn. And BHP stock has a lot of ground to cover if it's to reach mid-January highs.
Meanwhile, while the volatility index continues to fall, readings are still well off the charts. At market close on April 9, the index sat at 34.7 points.
In these uncertain times, prospective shareholders must decide whether to jump now, or else risk missing the boat.