Shares of BHP Billiton Limited (ASX: BHP) have been stuck in a downward spiral over the last seven trading days, having retreated 11.5% in that time. That was topped off by a 5% fall on Wednesday as the stock went ex-dividend.
Investor sentiment is low because of the market's uncertainty regarding the future of commodity prices. Iron ore, which is BHP Billiton's most important commodity, is sitting at a six-year low at US$57.61 a tonne after having fallen almost 1% overnight, according to the Metal Bulletin, with some analysts tipping it to fall towards US$50 over the course of the year.
Meanwhile, oil prices have managed to recover over the last two months or so but there are concerns the rebound will prove temporary. Brent oil managed to rise overnight to roughly US$57.50 a barrel, but some economists suggest it could soon bottom out somewhere in the US$20s range.
Although, BHP Billiton is the world's most diversified miner, it still presents as a risky prospect given its leverage to commodity prices. With further falls anticipated for both commodities, investors would be wise to avoid BHP Billiton, and the mining sector in general, until the high level of volatility begins to subside.
