BHP Shares Near 52-Week High: Is a Breakout Imminent?

Morgan Winslow

ago 1 hour

The BHP Group Ltd (ASX: BHP) is experiencing a notable rise in its share price, recently increasing by 0.86% to $47.99. At its peak today, the stock reached $48.25, nearing its 52-week high of $48.49 established on January 7. Over the last year, BHP shares have gained nearly 20%, significantly outperforming the S&P/ASX 200 Index, which has an increase of just 7%.

BHP Shares Near 52-Week High

With the stock approaching recent highs, market analysts are contemplating whether BHP will breach this pivotal level for further gains.

Rising Commodity Prices Boost Sentiment

BHP’s share performance is closely tied to the increasing prices of commodities. Notably, iron ore—BHP’s primary revenue generator—trades at approximately US$108 per tonne, reflecting an 8% increase over the past year. This rebound follows a period of low prices, driven primarily by stabilizing demand for steel in China and controlled supply growth.

Iron Ore: US$108 per tonne
Year-over-Year Growth: 8%

In addition, copper prices have remained stable, supported by ongoing electrification trends and restricted global supply. These factors contribute to improving earnings expectations and overall market confidence within the sector.

Technical Analysis and Possible Breakout

From a technical perspective, BHP is trading at a significant level. The relative strength index (RSI) shows values in the low-to-mid 60s, indicating strong momentum without being overbought. The key resistance point resides around $48.50, correlating with the company’s recent 52-week high. A definitive break above this threshold could encourage further buying activity and push shares into the low $50 range.

Conversely, support levels remain near $45, which has proven to be a robust point during prior pullbacks. Additionally, with a beta around 0.7, BHP typically exhibits less volatility compared to the broader market, appealing to investors looking for stability in the resources sector.

Dividends and Investor Considerations

BHP currently offers a dividend yield of approximately 3.5%, including franking credits. While dividends will fluctuate based on commodity prices, the company’s strong financial position allows it to consistently reward its shareholders.

Upcoming Events

With BHP trading just shy of its 52-week high, the next few trading sessions are pivotal. A breakthrough above the resistance may reaffirm the upward trend, while a retracement could be expected after a sharp rise. Investors will also focus on the operational review slated for January 20, followed by half-year results on February 17. Any updates regarding production, costs, or future guidance during these events could serve as catalysts for the next movement in BHP’s share price.