THE resources sector was reeling in early trade on the Australian bourse today as the broader market faces its 10th straight day of losses on mounting recession fears in the United States.
Overnight, Wall Street's S&P 500 plunged to a 15-month low after Federal Reserve chairman Ben Bernanke reiterated that the Federal Reserve would act aggressively in efforts to halt a recession while US broking house Merrill Lynch reported a $US10 billion quarterly loss.
The impact was felt on the local market with the S&P-ASX200 dropping 2.9% to 5626.2 points in early trade.
The big end of town was hit hard at the start of trade, with mining giant BHP Billiton opening at $34.47, down 5.6%, while rival Rio Tinto opened down 7% at $110.08.
Iron ore play Fortescue Metals Group also had a horror start, opening at $6.30, down 4.4%, while gold miner Newcrest Mining dropped 2.7% to $36.20 at start of trade.
However, Fat Prophets analyst Gavin Wendt told MiningNews.net that the sub-prime fallout in the US was not that concerning from a resources perspective.
"I took great confidence from the comments that Tom Albanese made the other day in the announcement of Rio's December Quarter Activity Report where he said any slow down in the United States would not have much of an impact on Chinese commodity demand, and I agree entirely with that," he said.
"At the moment the market is being dragged down by a vortex of uncertainty regarding sub-prime in the US and really that is still very much a different issue from the resources sector."
Wendt said the fundamental demand and supply aspects of commodities haven't really changed.
"We have seen movement in commodity prices but we think that has more to do with trading and speculative issues, but the fundamentals haven't really changed in our view and are unlikely to change," he said.
The market has regained some ground in early afternoon trade with the S&P / ASX200 last trading down 115.7 points (1.9%) to 5680.4, while the All Ordinaries was last down 123.7 points (2.1%) to 5733.3 points.
ARH Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
