Rio Tinto Share Price RIses Despite Recent Struggles in China

Summary:
• The Rio Tinto share price has had one of its best performances in recent years this month, with its value surging by over 20 per cent.

The Rio Tinto share price has had one of its best performances in recent years this month, with its value surging by over 20 per cent. The performance follows months of horizontal trading that had seen the company trading within a narrow price range of 4400p and 5000p for more than four months. 

Why is Rio Tinto Share Price Recovering

Rio Tinto’s share price has come under pressure in the past few months following the Covid-zero strategy in China, which is one of its largest clients, accounting for more than half of its revenue. 

However, the trend has started to change in the past few weeks despite China continuing the Covid-zero strategy. In November, the company’s value went up by more than 20 per cent, and the trend is likely to continue for the next few weeks, pushing its prices further up from the current 5543p price level. 

Part of the reason we have seen the company’s continued growth throughout November is due to its impressive dividend yield, which currently stands at 9.2 per cent. Most investors are also looking at the company and comparing it with other mining companies and coming to the conclusion that Rio Tinto may be undervalued with a forward PE ratio of 6.0.  The improvement in the general feeling of the UK economy and its future prospects has also contributed to the current bullish trend. 

Rio Tinto Share Forecast

As seen from the above fundamental analysis, the situation in China has not adversely affected Rio Tinto’s performance in the markets for the past month. The chart below shows the company’s value has gone up by more than 20 per cent since the start of November. Today’s intraday trading also shows the aggressive bullish trend may be continuing, with prices already up by 3.5 per cent. 

Therefore, combining both technical and fundamental analysis, I expect the current bullish trend to continue. There is a high likelihood that we might see Rio Tinto’s share price trading above the 6000p price level by the end of the year. However, a drop below the 5400p price level will invalidate my bullish analysis.

Rio Tinto Daily Chart