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Rio Tinto announces $3.2bn share buyback with proceeds from coal asset sales

• The chart shows Rio Tinto’s share price movements over the past 6 weeks.
• The current share price is 3794p (at time of writing).
• Shares -18% from 2018 highs; +7.6% from 2018 lows; -3.4% year-to-date
• Share buybacks are considered supportive of the share price given the company is a forced buyer
• Analysts at Jefferies (20 Sept) say “those doubting miners’ commitment to shareholder returns should think again”

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Trading Rio Tinto – An Example

Let’s say you think that Rio Tinto is likely to rise as a result of this news. You decide to buy exposure to £10,000 worth of Rio Tinto using a CFD, at the current price of 3794p. To do this, you need £2,000.

For the purpose of this example, let’s assume the Rio Tinto shares price rises by 10% following the news. Your profit would be £1,000, from your initial investment of £2,000.

Conversely, let’s assume you open the above position, and place a stop-loss at 5% from the current price, at 3604p. Rio Tinto shares fall back 5% and hits your stop-loss. Your loss would be £500

This is provided for information purposes only. It should not be taken as a recommendation.