Australian stocks extended losses on Monday (20 June) as recessionary fears gripped investors. The energy and materials sectors led losses in the market amid a slump in crude oil and commodity prices respectively. Fresh Covid-19 led restrictions in China, the biggest importer or base metals, has clouded demand outlook for metals like iron and copper. Meanwhile, fears of a global recession are weighing on crude oil prices. Brent crude price, the global benchmark for crude oil, has fallen from nearly US$120 per barrel mark last week to US$113 at the time of writing the article.
Given these global factors the ASX200 Materials sector index (XMJ) lost over 4% by noon trade. Here is how leading materials stocks on ASX–BHP Group Limited (ASX:BHP), Fortescue Metals Group Limited (ASX:FMG), Rio Tinto (ASX:RIO), South32 Ltd (ASX:S32) and Newcrest Mining Limited (ASX:NCM)—are performing today.
Note– prices mentioned in the story are as of 20 June 2022, noon on the ASX.
BHP Group Limited (ASX:BHP)
Mining behemoth BHP Group’s shares headed south today. While there is no new announcement by the company, a dip in oil prices and a slump in commodities prices seem to be affecting investors’ sentiments.
Worth mentioning here is that BHP’s management recently decided to retain the New South Wales Energy Coal (NSWEC) business as the company was unable to find a buyer for this asset. It is believed that a rise in thermal coal spot prices, given the Russia-Ukraine situation, could boost the near-term EBITDA of the company. While BHP is still pursuing the mining permits to carry on its operations until 2030, BHP share price has slipped down 4.4% today.
Fortescue Metals Group Limited (ASX:FMG)
Iron ore and green energy-focused Fortescue Metals Group Limited’s share price slipped over 7% today. The fall was seen without any major announcements from the company. Meanwhile, Iron ore futures in China have slumped more than 9% in the morning on concerns of an economic slowdown and its effect on steel demand. The fall in Fortescue’s share price appears largely influenced by the red metal’s price dip.
Rio Tinto (ASX:RIO)
Another materials sector stock affected by the iron and steel price slump today is Rio Tinto. RIO share price is down over 5% today. The stock fell in-line with the broader sector trend. In the last one week, the stock has fallen over 7%.
Snapshot of share price performances on Monday noon
Image Source © 2022 Kalkine Media ®
South32 Ltd (ASX:S32)
Share price of South32 Ltd reached its three-month low today. The diversified metals and mining company’s share price is down over 3% at the time of drafting. S32 shareholders have lost over 14% in the last 30 days.
In the latest from its operations, South32 Ltd has, at the beginning of June, acquired an additional 16.6% interest in Mozal Aluminium. The company is continuously increasing its exposure to green metals and is reportedly on track to grow its annualised equity share of green aluminium production.
Newcrest Mining Limited (ASX:NCM)
Gold miner, Newcrest Mining Limited’s share price is also down over 3%. In the absence of any price sensitive ASX releases, NCM’s share price appears to be aligning with the materials sector trend. Meanwhile, gold prices are firm amid recessionary fears across the globe. However, gold focused NCM shares have not been able to capture the gold price rebound. Instead, NCM shares are trading in the red zone.
Interesting read– This ASX mineral explorer is up 600% in six months, beats benchmark index
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