Is ArcelorMittal Stock Likely To Recover From The Recent Selloff?

MT: Arcelor Mittal logo
Arcelor Mittal

ArcelorMittal stock (NYSE: MT), the largest steel producer in Europe, declined by about 16% over the last month (about 21 trading days). While the company’s financial performance over the first half of 2022 has actually been pretty strong, with operating profits and steel price realizations rising versus last year, there are multiple headwinds clouding the outlook for the steel market. With the Russian invasion of Ukraine now into its seventh month, elevated energy prices and supply chain issues are weighing on consumers in Europe, which is ArcelorMittal’s single largest market (about 53% of sales in 2021). Moreover, the U.S. Federal Reserve and other major central banks have also been hiking interest rates at an aggressive pace to combat inflation. Last month, the U.S. central bank raised its benchmark rates yet again by 0.75%, taking the Federal Funds rate to over 3%, from just about 0.25% at the beginning of this year. Higher interest rates are likely to impact economic growth and steel demand from key sectors such as the construction and automotive industry.

However, now that MT stock has seen a decline of about 16% over the last month, will it continue its downward trajectory in the near term, or is a rally imminent? Going by historical performance, there is a 59% chance of a rise in MT stock over the next monthOut of 197 instances in the last ten years that MT stock saw a twenty-one-day decline of 16% or more, 116 of them resulted in MT stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 116 out of 197, or about 59% chance of a rise in MT stock over the coming month, implying a positive near-term outlook for the stock. See our analysis on  ArcelorMittal Stock Chance of A Rise for more details.

Calculation of ‘Event Probability’ and ‘Chance of Rise’ using last ten years data

  • After moving -2.4% or more over five days, the stock rose in the next five days on 47% of the occasions.
  • After moving -10% or more over ten days, the stock rose in the next ten days on 53% of the occasions
  • After moving -16% or more over a twenty-one-day period, the stock rose in the next twenty-one days on 59% of the occasions.
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This pattern suggests that MT stock is likely to see some gains in the near term.

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Returns Oct 2022
MTD [1]
YTD [1]
Total [2]
 MT Return 0% -38% -9%
 S&P 500 Return 0% -25% 60%
 Trefis Multi-Strategy Portfolio 0% -26% 195%

[1] Month-to-date and year-to-date as of 10/2/2022
[2] Cumulative total returns since the end of 2016

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