Shares of BHP Billiton Limited (ASX: BHP) have been slammed this morning, plummeting 5.4% to trade at just $30.20. Today marks the stock's seventh consecutive day in the red, having lost 11.9% of its value in that time.
Here are three reasons the stock has fallen so heavily today:
- Ex-dividend. The stock is now trading ex-dividend, with investors holding the stock today entitled to the US62 cent per share distribution announced late last month. Based on today's exchange rate of $A1 = US$0.7638, that equates to roughly AU 81.2 cents per share.
- Iron ore. Iron ore, which is BHP Billiton's most important commodity, stabilised overnight but it remains near a six-year low at roughly US$58.50 a tonne, according to the Metal Bulletin. Rivals Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG) are also feeling the squeeze with their shares down 1.4% and 3.5% today, respectively.
- Oil price. Adding to BHP Billiton's woes, the oil price retreated further overnight with Brent oil slipping US$2.32 to US$56.21 a barrel. Although oil prices have rebounded over the last two months, many analysts believe there could still be more pain in store for the producers.
Despite its diversification, BHP Billiton still presents as a risky prospect given its leverage to commodity prices. With further falls anticipated for both commodities, I'm choosing to avoid the sector altogether.
