The signs looked quite promising early with the S&P-ASX 200 index up 0.4% to 3921.4 points before cooling in afternoon trade to close 0.3% lower at 3892.1 points, while the All Ordinaries slipped 0.4% to 3887.4 points.
A day after launching its $US15.2 billion ($A19.2 billion) rights issue, Rio Tinto plunged by as much as 9.5% to an intraday low of $52.19, before closing the day at $52.52, down 9%, with 9.4 million shares changing hands by market close.
BHP Billiton finished the session 2.7% lower at $34.70.
Patersons senior client adviser Peter Morgan told Dow Jones Newswires that the weakness in Rio and BHP’s share price was likely short term.
“I think the Rio, BHP weakness is as much to do with the rights issue as anything else and that after a few days you will see them stabilise and start going up again,” he told the newswire.
Morgan added that despite new money coming into the market, many investors had been selling resources to take up the Rio rights issue.
Meantime, analysts at UBS have maintained their buy rating for Rio but have lowered their target price for the major miner from $A90 to $70 to take into account the impact of Rio’s rights issue.
Australia’s third-largest iron ore producer Fortescue Metals Group shed 1.6% to close at $3.71, while OZ Minerals fell 4.2% to 92.5c and Paladin Energy plunged 9% to $4.54.
On the base metals front, analysts at JPMorgan believe the copper correction is not over, despite signs of stability in the past couple of sessions, Dow Jones reported.
“The clear consensus in the market, especially amongst analysts, is that copper must pull back even further now that Chinese demand has faded away sharply (reflected in the rising level of SHFE inventory, the SHFE curve structure and the spot premia in Shanghai – indeed SHFE stocks this week could rise some 20,000 tons if not more),” the report said.
Since hitting its peak for 2009 of $US5388 per tonne last Thursday, London Metal Exchange copper for three-month delivery has slipped 7.9% to last night’s closing price of $4960/t.
Nickel fell 1.7% overnight to $14,850/t, while zinc fell 1.1% to $1552/t.
Spot gold was trading slightly higher at $938.70 an ounce at 4:00pm AEST. Newcrest Mining closed down 1.2% at $A30.72, Lihir Gold dipped 1% to $2.86, while Sino Gold Mining ended 2.4% lower at $5.23.
One of the big movers today on the bourse was YTC Resources which hit an intraday high of 31c, up 55%, on news it had purchased CBH Resources’ interests in the Hera and Nymagee gold tenements in New South Wales for $12 million.
YTC intends to develop a gold and base metal project at Hera with ore from the tenement to be trucked to CBH’s Endeavor mine for processing.
The Hera tenements lie 150km south of Endeavor by road.
Shares in YTC closed the session 50% higher at 30c.
