Market bloodbath: $20 billion wiped out

Falling commodities prices and weak Chinese data pull the market down

a woman

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The S&P / ASX 200 Index (Index: ^AXJO) (ASX: XJO) has fallen by 1.4% in mid-afternoon trading led down by mining stocks and gold miners in particular.

Falling commodities price and weaker than expected Chinese GDP data has seen more than $20 billion wiped off the market, and it could be much worse by the end of trading.

Gold losing its shine

Over the weekend, gold fell by around 5%, and is now officially in a bear market, having lost more than 20% since a record close in 2011. The metal continued its falls today, and dropped as low as US$1,425 an ounce. Australia鈥檚 biggest gold miner, Newcrest Mining (ASX: NCM) has lost 9% today as was trading at under $18, while Alacer Gold Corp (ASX: AQG) has plummeted a massive 19%. Needless to say, the outlook for gold miners is fairly bleak, with some analysts suggesting the demise of gold is at an early stage, with beleaguered European countries potentially forced to sell gold to raise funding.

China growth slows

China鈥檚 economic pace appears to be slowing too, with the country reporting a 7.7% rate of growth for the first quarter this year, well below what analysts had expected. World Bank estimates were for China to achieve growth of 8.3% for 2013. China鈥檚 retail sales also slowed to 12.6% in March, down from over 15% in December. Industrial production recorded its lowest level since August 2012, and the bad news comes just a week after China suffered its first credit rating downgrade in 14 years.

The news doesn’t bode well for our economy and in particular our resources companies. On top of that, media reports suggest that our two biggest miners, BHP Billiton (ASX: BHP) and Rio Tinto Limited (ASX: RIO) will report weak March quarterly sales, later this week, thanks to cyclones which closed iron ore and coal export ports in Western Australia and Queensland. BHP shares were down 3.8% while Rio lost 4%.

Foolish takeaway

For some investors, the price falls may be an opportunity to buy into those stocks that have been thrown out with the bath water.

With its legendary, fully franked 28 cent dividend,聽Telstra聽is the darling of Aussie investors. Chances are even if you don鈥檛 own聽Telstra聽shares directly, your superannuation fund does. But with its share price skyrocketing over the past year, is聽Telstra聽past its prime?聽Click here聽for our brand-new report:聽Buy, Sell, or Hold聽Telstra?

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The Motley Fool鈥檚 purpose is to help the world invest, better.聽Click here now聽for your free subscription to Take Stock, The Motley Fool鈥檚 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.聽 This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Mike King owns shares in BHP.

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