Asian markets all in the red

Australia’s ASX200 finished 2.4% lower at the close with resources – including BHP and Rio Tinto – leading the market lower.

On the former, Chairman Jac Nasser today told an audience in Sydney that future spending worth $80bn, as previously targeted, might need to be postponed. “We should pause, take a deep breath and wait and see where the pieces fall around the world,” he said while not quantifying the actual amount of spending to be cut.

We note this because BHP is a globally significant miner, with operations all around the world and a market capitalisation which makes it one of the largest listed companies across the entire Asian region.

BHP’s spending intentions will no doubt flow through the industry and there will be a direct impact to the reported investment pipeline across the globe, hurting sentiment around mining contractors and other construction companies.

The Reserve Bank of Australia for example has held the huge pipeline of future minerals project as a key reason for holding higher rates over the past few years. This is an example of just one implication to markets from BHP’s comments.

In currencies, the Australian dollar fell below 99 US cents to last trade at 98.98. The Euro also continues to struggle, last trading at 126.98 against the US dollar as Greece looks towards interim measures that pave the way for another election, no doubt providing more doubt around markets about the future of the southern European nation.

Commodities were lower as well, with gold falling by a significant amount to last settle at US$1532/oz. Copper looks set to open weaker when trading resumes in London, indicating around US$3.46/oz.

It seems like the US$3.30/lb test might come sooner than expected. All eyes will be on US trading tonight with industrial output numbers due this evening Asian time.