The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has dropped 1.8% as we head into the final hour of trading on the ASX today.
That equates to around $28 billion in value wiped off the market. And it could get even uglier before the day is out, as investors and traders abandon ship.
Source: Yahoo Finance
The large oil stocks are leading the falls, with Santos Ltd (ASX: STO) down 9.7%, Woodside Petroleum Limited (ASX: WPL), and BHP Billiton Limited (ASX: BHP) down 4.9% at $29.42. Not many people realise that one third of the giant miner's revenues comes from petroleum sales.
Origin Energy Limited (ASX: ORG) which is not just a retailer of electricity and gas but an energy producer is also down, losing 4.5%.
The falls illustrate how dependent Australia's economy is on resources exports. Iron ore, coal and gas are among our top export earners, but recent falls in commodity prices has seen some of our major companies hammered.
And as our large cap stocks make up a significant portion of our index – their falls produce a big drag on the market. Having said that, small cap stocks are getting hit even harder today, with the S&P/Small Ordinaries (Index: ^AORD) (ASX: XAO) down 3.5%.
The Small Ords contains many smaller gold, copper, oil and gas and more speculative resources stocks. Leading the falls in this index are Tiger Resources Limited (ASX: TGS) and PanAust Limited (ASX: PNA), both copper stocks and both down more than 23% as I write.
Copper prices fell to their lowest levels since 2010 on the London Metal Exchange, with many investors suggesting that China's economic growth is slowing and demand for commodities is set to fall in the years ahead.
Now, December has usually been a positive month for the Australian stock market as my colleague Bruce Jackson pointed out here. But maybe not this year given today's market fall, and we may have to wait until early next year for some strong drivers.
Even if December does prove to be a fizzer, Foolish investors would be wise (and Foolish) to continue to buy quality companies at cheap prices and hold for the long-term. It's something I plan on doing.
