Asian stocks still in the red on European concerns

<p>Asian markets continued their downward spiral today amidst concerns surrounding the European economy. In trading, the MSCI Asia Pacific Index lost 2.1% and the Nikkei […]</p>

Asian markets continued their downward spiral today amidst concerns surrounding the European economy. In trading, the MSCI Asia Pacific Index lost 2.1% and the Nikkei 225 Stock Average sank 2.2% after Japan’s markets resumed after a holiday.

Australian miners were worst hit during the trading day today, taking large losses. The S&P/ASX200 Materials index was down by a massive 3.9% as commodity prices across the board continued to decline. There is a real concern that the iron ore price will continue to fall, ending a honeymoon period which has seen it rise by almost four times since its 90s decade low. 

The key losers are the emerging, high cost iron ore producers in the Pilbara region of Western Australia. Murchison Metals which owns 50% in the Crosslands Resource and Oakajee Port and rail in the Pilbara region, in joint ventures with Mitsubishi, closed 19.5% lower today. 

Listed heavyweight Rio Tinto was also down today, shedding 3.9%. Not only does Rio have downside exposure to the iron ore price but news around its Mongolian mining exposures did little to help contain the decline in sentiment. 

Long-running tensions between Rio and its Oyu Tolgoi partner – Ivanhoe Mines – are set to flare again. News that the Mongolian government is also looking at revising its interest in the project increases sovereign risk concerns. 

Australia remains an attractive destination for resource and minerals development projects, but the short term fallout from lower commodity prices probably still has a little left to run. 


Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.