However, there were signs of bargain hunters for shares in Australian resource companies in afternoon trade, with the majors rallying from intraday lows.
BHP Billiton, which hit an intra-day low of $31.02, gained ground in afternoon trade and closed at $33, while Rio Tinto, which hit a low of $79.35, closed at $82.57.
The S&P-ASX200 was at one point down 5% at 7-month low of 5500 after the Australian Securities Exchange’s decision to halt trading on the futures exchange.
The fall came after another bad night on Wall Street with the Dow Jones Industrial Average dropping 167.45 points (1.3%) and represented the biggest drop on the S&P-ASX200 in over seven years, eclipsing the shakeout immediately after the September 11 terrorist attacks.
However, according to market watchers, the current bloodshed on the bourse had little in the way of similarities to the great stock market crash of 1987.
“I don’t think it is going to get to that stage simply because all the fundamentals are still in place,” Fat Prophets analyst Gavin Wendt told MiningNews.net.
“Back in 1987 I think it was a different situation. Back then we didn’t have China… we didn’t have India.
“I think the resource sector has been particularly badly hit because investors have had to take profits on their resource sector investments whether they are commodities or equities to cover losses in other areas.”
Wendt said he was still very positive on the continuation of the resources boom.
“I think what is does is reinforce for a lot of first time investors or people who haven’t seen a crash before that markets can move both ways,” Wendt said.
A view echoed by Hartleys resources analyst Andrew Muir who told MiningNew.net the bull market for commodities should continue into the foreseeable future.
“China is not going to go away…that is the bottom line,” he said.
“Fundamentally China will still go through very strong growth and I don’t think that is going to abate in the short to medium term.”
Once again, base metal plays had a bloody day on the bourse following a further drop in London Metals Exchange base metal prices overnight.
Three-month copper dipped 1.4% to $US7310 per tonne with the bulk of copper plays on MiningNews.net watchlist following suit.
Equinox Minerals fell 16c to $3.34, while Aditya Birla dropped 19c to $281 and Indophil Resources shed 10c to 78c.
Nickel dropped 2.9% to $26500/t, while zinc shed some 2% to $3230/t and lead fell some 1.7% to $2960/t.
Meantime spot gold fell $2.65 to $665 per ounce with gold play Centamin Egypt falling 16.5c to $103.5, while Newcrest fell 60c to $24.52 and Lihir Gold shed 13c to $2.91.
Uranium stocks also felt the pinch with only a handful of companies, including Paladin Resources, ending the day in the green.
Paladin today announced plant commissioning was on schedule for the fourth quarter 2008 at its Kayelekera uranium project in Malawi after the company signed three major contracts for the project's development.
