You are here
Australia: Shares slide, miners hit by iron ore prices
[WELLINGTON] Australian shares slipped on Monday, hit by losses in mining companies on the back of struggling iron ore prices, while market participants said foreign investors were trimming exposure to the country's stocks.
Top miner BHP Billiton plumbed a 14-month low after announcing it will cut costs aggressively and boost production capacity. This raised concerns that increased production could put further downward pressure on iron ore prices.
The S&P/ASX 200 index lost 21.51 points to 5,296.70 by 0132 GMT, brushing off a strong rally in US stocks on Friday, when strong jobs data bolstered the view that the US economy was improving.
Local trading was thin due to a public holiday in most Australian territories, keeping shares stuck near a 7 1/2-month low hit last week. "It's a market-wide reduction in exposure to Australia,"said James Smalley, director at Hamilton Hindin Greene in Christchurch, adding that the sell-off in Australian shares in the past month has coincided with a weaker domestic currency. "Even through US and European markets were strong, the Australian market is off," he said.
Market participants said that lingering worry about growth in China, a top buyer of Australia's commodity resources, had raised concerns about the prospects for Australian mining companies among foreign investors, which had led to selling.
BHP Billiton fell 1.7 per cent to A$32.87, its lowest since July 2013, after it said it would cut its iron ore production costs by more than 25 per cent and outlined an expansion plan on expectations that iron ore demand will pick up after prices have slumped 42 per cent this year.
Fortescue Metals fell 2.2 per cent to A$3.37, struggling as prices for iron ore for immediate delivery to China .IO62-CNI=SI hovered near a five-year low hit last week.
New Zealand's benchmark NZX50 index slipped 0.9 point to 5,236.13, tracking losses on the Australian market.
Fletcher Building slipped 0.5 per cent to NZ$8.60 after the building equipment manufacturer said its operations in Auckland had been disrupted by a power outage in New Zealand's largest city, although it would not have a big impact on profit. - Reuters