The best-performing shares on the ASX this week

With iron ore prices recently falling below $100, concerns are mounting about the outlook for Australia's largest iron ore companies.

So, are we facing a potential crisis, or is this a rare chance to acquire major mining stocks at a discount?

The ongoing economic slowdown in China and broader global instability have driven iron ore prices down to around $98-well off the mid-2021 peak of $220.

However, the $98 level has acted as a springboard for price gains in the past, suggesting a potential bottom may be near.

Australia's heavy reliance on the materials sector means that fluctuations in iron ore prices have a significant impact on its biggest companies.

While giants like BHP and Rio Tinto are closely tied to iron ore, some specialised stocks in the sector could benefit greatly if prices rebound.

Here are three companies to watch:

Bluescope Steel (ASX: BSL)

Bluescope recently reported an FY24 net profit after tax of $805.7 million, down $203.5 million from the previous year due to lower steel prices and rising input costs.

Despite these challenges, the stock has maintained an uptrend since 2012, and if it breaks through $24, a rally towards $30 in the medium term could be on the horizon.

Mount Gibson Iron (ASX: MGX)

Mount Gibson Iron posted a FY24 net profit after tax of $6.4 million, a significant improvement driven by higher production volumes and favourable prices.

Although the stock has been in a downtrend since May 2019, this positive news could signal a potential turning point. However, without clear confirmation of a price reversal, waiting for further developments in price would be the best approach.

Fortescue Metals (ASX: FMG)

Fortescue is set to report FY24 results on August 28, expecting a net profit after tax of US$5.88 billion, marking a notable increase from last year.

The stock has seen a sharp decline since peaking in February 2024, now down more than 40%. However, given the three previous corrections in Fortescue have been around 50%, there could be buying interest soon.

If the iron ore prices recover, these companies' share prices could see a rapid increase. Therefore, watch closely for any upcoming opportunities.

What are the best and worst-performing sectors this week?

The best performing sectors include Information Technology, up more than 9%, followed by Materials and Industrials, up more than 2%.

The worst performing sectors include Energy, down more than 2%, followed by Real Estate, down more than 1% and Consumer Staples, down under half a per cent.

The best performing stocks in the ASX top 100 include WiseTech Global, up more than 28%, followed by Charter Hall Group, up more than 15%, and Brambles, up more than 14%.

The worst-performing stocks include the A2 Milk Company, down more than 15%, followed by Domino's Pizza, down more than 7% and Dexus down more than 6%.

What's next for the Australian stock market?

The All Ordinaries Index has gained more than half a per cent this week, building on the momentum from last week's buying activity. As a result, the market has now reached a critical price level that warrants attention.

Since mid-July 2024, the All Ords has failed to provide a weekly close above 8209 points, despite trading at or above this level on five separate occasions.

There's a saying that professionals close the market, and with the index once again hitting this level, we're at a pivotal moment.

If the All Ords closes above 8209 points this week, we can confirm buyer strength, which will likely see a push to break the previous all-time high of 8375.80.

However, if it fails to close above 8209 points, a swift retreat to the 7900 level may follow.

Given reporting season's impact on market direction, the final round of results next week will play a decisive role in determining the market's next move. So far, the season has been positive, with more companies exceeding expectations, though the overall performance is down from last year.

With major players like BHP, Fortescue Metals and Ramsay Healthcare yet to report, expect volatility in the coming week with positive results providing the catalyst to drive the market to new all-time highs.

Additionally, next week's CPI numbers are crucial to watch. A favourable inflation reading could push policymakers closer to an interest rate cut, which would further support rising market prices.

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