Fortescue Ltd (FMG.AU), a major Australian iron ore miner, saw its stock plummet 5.20% during Wednesday's trading session, despite receiving an upgrade from Goldman Sachs. The sharp decline comes as the broader Australian market faces downward pressure and concerns grow over global trade tensions.

Goldman Sachs raised its rating on Fortescue shares from Sell to Neutral, setting a price target of $15.30. The upgrade was primarily based on valuation grounds, with the stock trading at approximately 0.8 times its net asset value. However, the positive analyst sentiment was not enough to prevent the stock's significant drop, which outpaced the expected 2.1% decline in the S&P/ASX 200 Index.

The selloff in Fortescue shares may be attributed to several factors. Firstly, Goldman Sachs noted that they expect the company's free cash flow to compress over 2025, in line with their lower iron ore price forecasts. This outlook could be weighing on investor sentiment. Additionally, concerns over a potential full-blown trade war, which have already impacted oil prices, may be spilling over into the iron ore market, affecting major producers like Fortescue. While the company reportedly has levers it can pull on operating expenses and capital expenditure if required, investors appear to be taking a cautious stance in the face of broader market uncertainties.