SYDNEY: Major resources stocks haven fallen under intense pressure as commodity prices plunge to new lows, causing the sharemarket to close substantially weaker.
Oil prices slumped about 5 per cent overnight to reach new seven-year lows after an OPEC summit on Friday, where member countries did not agree to lower production amid a supply glut.
Meanwhile, the iron ore price sank past $US39 a tonne to settle down 1.3 per cent at $US38.90 — its seventh straight loss.
The falls in the two major commodities saw investors in energy and mining stocks rush for the exit, sending the entire market lower.
At the 4.15pm (AEDT) official market close, the benchmark S&P/ASX200 index was down 47.1 points, or 0.91 per cent, at 5108.6, while the broader All Ordinaries index fell 47.9 points, or 0.92 per cent, at 5158.
“Commodities related stocks have been hammered,” Australian Stock Report researcher Chris Conway said.
The last two months have produced arguably the most painful period for iron ore producers through the 18-month bear market, with prices tumbling from above $US55 a tonne into the $US30 range, a price where only the majors can turn a profit.
“It’s carnage in the oil, materials and gold spaces and as bad as things are, there doesn’t appear to be any immediate respite on the horizon,” Mr Conway said.
“OPEC isn’t willing to cut oil production, iron ore demand and steel production in China are getting whacked and a stronger US dollar is hurting gold — along with all other commodities.”
BHP Billiton was savaged today, dropping to a new decade-low, and leaving the world’s largest miner down around 20 per cent in a month. The mining sector was down more than 3 per cent.
BHP Billiton was down 5.23 per cent to $17.05, while Rio Tinto fell 4.29 per cent to $42.40.
Fortescue lost 2.96 per cent to $1.805.
Mining services firm Orica was off 3.66 per cent to $15.20 after it announced a $36m hit to its bottom line.
