Rio Tinto Limited (ASX: RIO) has seen its share price fall 2.2% today, adding its weight to the fall in the market. The S&P/ASX 200 (Indexasx: XJO) (ASX: XJO) has slipped 0.3% at the close.
Shares in the giant iron ore miner have steadily dipped throughout the day, falling below $58 before lunchtime, and closing at $57.70.
Here are five reasons why the shares might be trading lower today…
- Profit taking. Shares rose above $60 (briefly) earlier this month and some investors may still be taking profits on Rio Tinto.
- Falling iron ore price. The spot iron ore price fell 0.5% overnight to US$62.58 a tonne. Iron ore prices have been recovering recently, but many analysts are forecasting further falls and lower prices for many years as overcapacity and low demand persist.
- The ATO is said to be targeting 30 multinational companies for tax evasion. Rio Tinto has been accused in the past of diverting profits through its Singapore marketing arm, where it pays lower tax rates. The ATO is expected to impose a penalty requiring the companies to pay double the original tax plus interest.
- Investors switching into BHP Billiton Limited (ASX: BHP). BHP Billiton will shortly demerge its non-core assets into a newly listed entity, South32. Some investors may want to be on-board South32 when it lists, and are freeing up the cash now, by selling out of Rio.
- The Australian dollar has surged above US 81 cents. That means Rio's Australian earnings will likely take a hit.
Here's Rio's 5-year share price chart. Not exactly impressive is it? Shares are down 4.5% since 17 May 2010. Over the same period, the S&P/ASX 200 has risen 32.7%.
Source: Yahoo Finance
Here's a better bet than Rio, or BHP for that matter.
