BHP Group Ltd [ASX] (BHP)

BHP Group Ltd. Overview

BHP Group Ltd. (ASX; ticker: BHP) was founded on 13 August 1885 and is headquartered in Melbourne, Australia. With offices in nearly 100 locations worldwide – including countries such as Australia, Chile, Brazil, the US, and Canada – BHP is now the largest mining company in the world according to market capitalisation (A$201.94 billion).

The company's primary operations aim to satisfy global demand for essential commodities, including copper, iron ore, nickel, metallurgical coal, potash, and more. To address the increasing demand for these commodities – driven by population growth, decarbonisation, urbanisation, and electrification – BHP focuses on a number of core activities, including exploration and acquisition, mining and extraction, production and processing, as well as marketing and transportation.

Why Trade BHP Group Ltd. Shares?

2024 was challenging for BHP, down 21.5% and trimming a 37% rise between 2022 and 2023. This poses the question of whether the Stock represents good value at current levels.

Analysts are understandably cautious in their forecasts this year for BHP, a company marred by a slump in iron ore prices, soft growth out of China, and elevated inflation increasing costs. Although China’s Q4 24 GDP growth (Gross Domestic Product) grew by 5.4% and surpassed analysts’ expectations, deflation remains an issue for the country on the wholesale side, with consumer inflation (Consumer Price Index) slowing for four consecutive months to 0.1% in December 2024. Therefore, despite rosier GDP numbers for China, some analysts are sceptical regarding an economic recovery this year, which will likely influence BHP’s Share price.

Technically, the BHP Stock has also been entrenched in a downtrend since 2024, but the pullbacks have been significant. This suggests that although sellers remain in control as of writing, buyers are still present.

What Influences the Price of BHP?

• Earnings

Corporate earnings reports are one of the key drivers of Stock prices, and volatility can be particularly notable when earnings exceed or fall short of analysts’ expectations.

Earnings season provides investors with a quarterly summary of a company’s standing and forecasts of future performance through forward guidance. Investors focus on key metrics such as revenue, net profit/loss, debt levels, and operations costs and compare these to previous quarters and analysts’ forecasts.

BHP's ability to execute its business strategy, maintain operational efficiency, and optimise production influences its Stock price. Operational performance, including meeting production targets, controlling costs, and maintaining a strong balance sheet, significantly affects investor sentiment. Any operational setbacks, such as production delays, safety incidents, or cost overruns, can harm the company's reputation and the Stock price.

• Regulatory Changes and Environmental Policies

Changes in environmental regulations and government policies can significantly impact BHP's operations and costs. For instance, stricter ecological standards or carbon emissions regulations may require BHP to invest heavily in new technologies or processes to comply, potentially affecting its bottom line. Conversely, favourable policies or tax incentives for mining operations or clean energy initiatives can boost investor confidence and support BHP's price.

How To Trade BHP Group Ltd. (BHP) CFDs?

With the BHP Stock trading at interesting levels, several options are available for investors. However, how one trades will ultimately depend on their Trading Plan. From Stock selection to entering and exiting positions and risk management, this is a blueprint for managing your investing. Some investors favour technical analysis over fundamental analysis, while many will combine both types of analysis to generate investment ideas. The FP Markets Academy can help new investors understand how to begin trading the financial markets through easy-to-follow articles and clear videos.

A Contract for Difference (CFD) is a leveraged derivative product that allows investors to speculate and hedge on the price movement of an underlying asset, such as the BHP, without owning it.

CFD investors enter into contracts where they agree to exchange the difference between a trade's opening and closing prices, with all contracts settled in cash. When trading BHP Share CFDs, investors can enter either a long (buy) or short (sell) position, depending on whether they anticipate BHP's price will rise or fall. CFDs also provide access to leverage, which means traders can control a larger position size with a relatively smaller initial investment (initial margin).