Australian shares fell on Thursday, led by miners after Fortescue (ASX:FMG) warned of a drop in its cash balance and said its forecasts hinged on talks with Chinese state-backed iron ore buyer China Mineral Resources Group (CMRG).
The S&P/ASX 200 fell 0.8% to 8,660.90 points, its biggest decline in a week, after slipping 0.1% in the previous session.
Shares of Fortescue, the world’s fourth-biggest iron ore miner, fell as much as 4.2% to a more than one-year low after lower first-quarter shipments, though it kept its fiscal 2027 guidance, subject to talks with CMRG.
The miner also flagged that its cash balance fell 37% in the September quarter, while net debt more than tripled to US$2.8 billion ($4.02 billion) from US$0.9 billion at 30 June.
Glyn Lawcock, Head of Mining Research at Barrenjoey, said Fortescue was more directly exposed for now, noting BHP Group (ASX:BHP) had already resolved a similar dispute with CMRG, but warned that annual negotiations would get tougher for all producers as rising supply from Guinea’s Simandou Project shifts power to buyers.
The issue could also reduce government revenues, as iron ore has been a key source of tax and royalty income for Australia for years, he added.
Fortescue’s slide pulled the mining sub-index down 2%. Peers Rio Tinto (ASX:RIO) and BHP fell 2.9% and 2%, respectively.
Financials lost 1%, declining for a second consecutive session. All the ‘Big Four’ banks were down between 1.5% and 1.6%.
Technology stocks tracked their Wall Street peer Nasdaq to lose 0.8%, while the healthcare sub-index slipped 0.1%.
Energy stocks, on the other hand, notched a two-week high as oil prices gained ground to edge past US$100 a barrel.
Woodside Energy (ASX:WDS) added 2.6%.
In New Zealand, the benchmark S&P/NZX 50 index rose 0.1%, finishing at 13,691.85 points.
(Reporting by Jasmeen Ara Shaikh in Bengaluru; Editing by Nivedita Bhattacharjee)
Main image: Fortescue
