Australian stocks dropped 1.4 per cent on Monday as global miners BHP Billiton and Rio Tinto fell on concerns China's hungry appetite for commodities may ease as the country attempts to slow its economy.
The benchmark S&P/ASX 200 Index closed down 67.8 points at 4,901.2, according to the latest available data. The index is now about 9.4 per cent below its May 10 peak.
The September share price futures contract YAPc1 was down 1.9 per cent, or 93 points, at 4,865 by 4:27 p.m. (0627 GMT), representing a 36.2 points discount to the underlying index.
"The market's been spooked by volatility and it's got this short-term horizon," said Stuart Smith, a senior client adviser at brokerage Bell Potter Securities, adding that the index could fall further before Australia's financial year ends on June 30.
Investors have recently been concerned by the risk of higher interest rates in the United States and by seesawing commodity prices. Financial markets are primed for a US interest rate rise in late June and the risk of a further tightening in August.
Asian economic powerhouse China is also giving grounds for worry: "There are general concerns about a continual slowdown in what has been stellar growth out of China," said Leigh Gardner, the head of sales trading at ABN AMRO.
China said on Friday it would take steps to curb rapid credit growth. That put pressure on miners BHP Billiton Ltd./Plc and Rio Tinto Ltd./Plc, which have benefited from the country's strong demand for raw materials to feed its growth.
BHP fell 2.3 per cent at A$26.80 and Rio dropped 2.7 per cent to A$74.80. World number two zinc miner Zinifex Ltd. plunged 8 per cent at A$9.24. Orica Ltd., which makes explosives for mining companies, fell 3.6 per cent to A$21.55.
Adding to the woes of mining stocks was a dip below $7,000 a tonne in copper prices in Asian trade. Gold prices opened lower in early trade in Europe on Monday. Australian gold miner Newcrest Mining Ltd., fell 2.8 per cent to A$19.27.
Stocks to watch
* Woodside Petroleum Ltd. fell 1.7 per cent to A$41.92. The Australian oil and gas producer warned it may cut its 2006 production target after cyclones hit output this year.
* QBE Insurance Group Ltd. fell 1.8 per cent to A$20.86 on concerns about the risks from US hurricane season. "But there is a contrary argument to that: when they do get events such as that occuring they actually use that opportunity to increase rates in the market," ABN AMRO's Gardner said.
* OneSteel Ltd. fell 1.1 per cent at A$3.77. Goldman Sachs JBWere raised its short- and long-term recommendation on Australia's second-largest steel firm to "outperform" and "buy".
* Macquarie Infrastructure Group fell 2.5 per cent to A$3.49. The Australian toll-road investment fund said it would go ahead with a share sale of its stakes in three Sydney toll roads.
* Brambles Industries Ltd. was steady at A$10.68. The company said it had sold its Australian Cleanaway and Industrial Services businesses to US private equity firm Kohlberg Kravis Roberts & Co. for A$1.83 billion ($1.35 billion).
* Transpacific Industries Ltd. TPI.AX, which had been billed by local media as the front runner to buy Brambles' Australian Cleanaway assets, plunged 10.5 per cent to A$7.00.
* Babcock & Brown Infrastructure BBI.AX dipped 0.6 per cent to A$1.64. The investment fund and Australian Pipeline Trust have launched a A$371.7 million bid for GasNet Australia Ltd. APA gained 2.1 per cent to A$4.33, while GasNet soared 9.6 per cent higher to A$2.62.
AdvertisementAdvertise with NZME.
Latest from Business
Market close: Israeli attack on Iran sends markets into further turmoil
But the local index and its defensive stocks fared the best in terms of falls.