BHP share price is rallying ahead of its trading update that is scheduled for tomorrow. The stock is up by more than 0.70% and is 25% below its all-time high of 2,642p. Other mining stocks like Rio Tinto and Antofagasta are also doing well in the FTSE 100 today.
The background: BHP Group is a global mining company with operations in countries like Australia, North America, South America, and China. The company focuses on commodities like copper, iron ore, nickel, gold, potash, and coal. Its operations are large. For example, it owns about 57% of the Escondida mine in Chile; the biggest in the world. BHP shares are traded in London, New York, and Australia. It has a market cap of more than £107 billion.
What next: BHP share price is rising ahead of the trading update. Investors believe that the company will deliver excellent results due to the recent rally in the commodities market. The price of iron ore has surged as China boosts its steel production. Similarly, copper and other commodities have continued rising, which could lead to more profits.
However, the biggest risk for BHP and other miners is that commodities are usually cyclical assets. As such, the rising prices could lead to more production as companies aim to take advantage of the current rally.
On the daily chart below, we see that the BHP share price has been in a strong rally. It has risen by more than 135% from its lowest level in 2020. As a result, the price is above all moving averages while the Relative Strength Index (RSI) has moved from the overbought level of 75.
Therefore, the shares could rose to above 2,228p tomorrow after the earnings. However, there is also a possibility of a pullback due to the cyclical risk mentioned above. In case of a pullback, the next support to watch will be 1,853p.
