Bad news for resources stocks as China’s imports slow

The S&P/ASX 200 index (Index: ^AXJO) (ASX: XJO) fell 0.5% to close at 4,098.3 on news that China’s imports for May rose just 6.3%, less than half the 12.7% forecast according to Reuters. The market staged an early rise, but the news from China hit our markets and shares plummeted.

China’s imports from Australia in June rose just 1.7% from a year ago. Chinese domestic demand sagged, which is bad news for our exporters including resources companies. China is our biggest export market.

Nouriel Roubini (known in the popular press as Doctor Doom) has predicted the global economy will suffer the perfect storm next year that could be worse than the GFC. By 2013 he said the Eurozone debt crisis could speed up as the US heads for recession and emerging markets countries, Brazil, Russia, China and India slowed down sharply. And all that could be compounded by an inevitable war between the US, Iran and Israel. Talk about doomsaying.

The Australian dollar has fallen slightly against the US dollar, as investors seek a safe haven. It’s currently trading around 101.85 US cents.

Company News

Myer Holdings Limited (ASX: MYR) shares fell 7% to $1.67, after rising 17% in the last five days, following the David Jones Limited (ASX: DJS) aborted takeover bid, and renewed enthusiasm for retail stocks.

The Sydney Morning Herald reports that prices for business-class seats are at their lowest levels in real terms in almost 20 years, thanks to ongoing competition for corporate travellers between Qantas Airways Limited (ASX: QAN) and Virgin Australia Holdings (ASX: VAH).

BHP Billiton (ASX: BHP) has been ranked the 9th most profitable company in the Fortune 500, ahead of companies like Microsoft, Volkswagen, Ford, Wal-Mart, IBM and GE.

Winners and Losers

Of the top 10 stocks on the ASX, only Telstra Corporation  (ASX: TLS) managed to end up, rising 3 cents to $3.81. Westpac Banking Corporation (ASX: WBC) was the best of the banks, ending flat.

Newcrest Mining Limited (ASX: NCM) led the falls in the majors, dropping over 3% to end at $22.67, a far cry from its 52 week high of $41.50. Brambles Limited (ASX: BXB) saw its shares lose 1.8%, ending at $6.14.

BHP Billiton and Rio Tinto Limited (ASX: RIO) also saw 1% falls.

The Foolish bottom line

The Australian market continues to find reasons to post losses – investors seem to have one eye on the exit. Something tells me this may look like a missed opportunity in five years’ time.

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Motley Fool writer/analyst Mike King owns shares in BHP.  The Motley Fool ‘s purpose is to help the world invest, better.  Take Stock  is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  Click here now  to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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