Australia's mining and energy giants are once again acting as a weight on the share market with the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) falling 0.3% after iron ore and oil prices continued their slide overnight.
Iron ore fell 41 US cents to US$63.09, according to the Metal Bulletin Ltd. The commodity has now lost in excess of 53% since January 2014 as a result of waning Chinese demand and excess supplies from the world's largest producers, including Australia's own BHP Billiton Limited (ASX: BHP) and Rio Tinto Limited (ASX: RIO).
Meanwhile, Brent oil, the global benchmark, slid a further 1.7% overnight to be changing hands at just US$48.76 a barrel – down nearly 60% since peaking at US$115 in June last year. With OPEC and non-OPEC producers both refusing to back down from their production targets, concerns continue to mount over the global supply glut. While Iraq and South Africa have both suggested oil prices won't fall much further from here, others are saying it could fall a further 50% before bottoming out.
While Fortescue Metals Group Limited (ASX: FMG) shares have managed to recover more than 8% after it released its quarterly production report, BHP and Rio Tinto have both slid 0.2% and 0.4% respectively. There have been more notable falls in the energy sector early in the session with Woodside Petroleum Limited (ASX: WPL), Santos Ltd (ASX: STO) and Origin Energy Ltd (ASX: ORG) declining 1.8%, 3% and 2.3% respectively.
With further falls expected for both commodities, investors would be wise to avoid both sectors for the time being.
