Why is the Arafura share price down 5% on Friday?

Sellers have pushed the stock lower in today's session.

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Key points

  • Arafura shares are trading more than 5% lower in Friday's session
  • The wider industry is also sliding today in continuation of a near-term downtrend, suggesting broad sector weakness
  • Despite the selling pressure, Arafura has still gained more than 60% this year to date

The Arafura Resources Limited (ASX: ARU) share price has slipped 5.13% into the red on Friday afternoon and is currently at 37 cents.

Today's price action brings losses for the Arafura share price to 22% for the week, despite it gaining more than 60% this year to date, as seen below.

Despite no market-sensitive news from the rare earth developer this month, the stock attracted sellers at the 48 cents mark.

TradingView Chart

What's up with the Arafura share price?

The Arafura share price has been beaten down in June. This is despite the price of rare earth neodymium curling back up since May.

There's really been nothing directly attributable to the decline, as it's been quiet from the company's camp, and no other news has surfaced.

However, there's been a wider sell-off in the sector these past few weeks, suggesting broad-market weakness for ASX miners such as Arafura.

As shown on the chart below, Arafura shares have followed a similar trajectory to the S&P/ASX 300 Metal & Mining Index (ASX: XMM) this year to date.

The striking similarity in the direction of both instruments suggests there is a high degree of correlation between the two.

TradingView Chart

On this basis, it stands to reason this broad-sector weakness has spilled over into the Arafura share price today, in the absence of any other market-sensitive information.

Despite the selling pressure, Arafura shares have still gained almost 9% over the past month and 105% in the last 12 months.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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