Although the S&P/ASX 200 index fell just 0.1% today, resource stocks were absolutely decimated.
Weak commodity markets are keeping investors very nervous, and in my opinion I expect things to stay this way for quite some time. Here are four stocks that suffered some of the fallout today:
BC Iron Limited (ASX: BCI) plummeted 23.6% to $0.145 after management announced it was forced to suspend operations at its Nullagine Joint Venture, which it co-owns with Fortescue Metals Group Limited (ASX: FMG). While the company's Iron Valley operations remain open, there is significant uncertainty as to how much profit, if any, the operations are making. BC Iron shares could well fall further in the near future.
Sundance Energy Australia Ltd (ASX: SEA) shares were also hammered today, crashing 13.6% to $0.177 on no news, although both West Texas Intermediate (WTI) and Brent Crude oil lost another 1% overnight. With big producers like Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) facing lean times, investors are even more bearish on junior companies like Sundance.
Cimic Group Ltd (ASX: CIM) lost 5.7% to $22.53, despite announcing a $1.3bn contract win at a Queensland coal mine, as well as increased likelihood of successfully taking over Devine Ltd (ASX: DVN) in recent days. Although $1.3bn sounds impressive, investors should be wary that profit margins are often very slim and competition for contracts very fierce, reducing the profit that Cimic can make from these contracts. Cimic shares could well head down further if the Australian economy worsens.
St Barbara Ltd (ASX: SBM) lost 6% to $1.24 today, hardly a tragic outcome after its 1,000% rise this year but still reflecting the company's exposure to the value of gold, which fell slightly overnight. Today's fall likely also involved an element of profit taking, although a number of market watchers, including Deutsche Bank, suggest the stock could go as high as $1.50. Be that as it may, the outlook for the value of gold in the near term is uncertain, and St Barbara should be considered more risky than some other stocks out there.
