MORE than $25 billion was wiped from Australian resources stocks yesterday as falling coal prices and concerns that record oil prices would begin to weigh on global growth started a rush for the exits.
Coal and iron ore miners suffered most as investors hit the sell button amid concerns a seemingly unstoppable surge in oil prices could crimp global growth, The Australian reported.
A drop of about 10 per cent in the spot price of coal in the US, Europe and Australia was the catalyst for many sales and sent shares of Centennial Coal tumbling 14 per cent and Macarthur Coal down 7.7 per cent.
The biggest stock on the exchange, BHP Billiton, was sent plummeting 7 per cent and its $US160 billion takeover target Rio Tinto, which does not have an oil business, fell 7.8 per cent.
Both companies are highly exposed to moves in coal and iron ore prices, which have insulated them recently from sliding base metals prices. That they are reaping record contract price rises for both did not seem to matter.
The on-paper wealth of Australia's richest man, Andrew "Twiggy" Forrest, was taken down a peg or two, his iron ore upstart Fortescue Metals Group, now Australia's third-biggest miner by value, losing 12 per cent.
"The big catalyst for declining resources was that over-the-counter coal price fell in a heap, sending most US coal stocks down," Macquarie Private Wealth associate director David Halliday said.
"You've seen falls in base metals and now in coal. It gets people thinking all these bubbles burst at some point."
The absence of a break in rising oil prices also spurred concerns that the engine room for global growth and commodities demand, China, will at some stage take a hit from surging energy costs. Benchmark New York crude oil futures crossed $145 a barrel in trading last night, leaving the psychologically important $150 level just a stone's throw away.
Illustrating just how contagious a bout of selling can be, energy stocks were not seen as a safe haven and the ASX/S&P200 energy index dropped 4.2 per cent.
The recent health of energy company shares was reason enough for some to get out, figuring prices were probably too high and fearing others were thinking the same thing.
Shares in Australia's biggest dedicated oil and gas company, Woodside, slid 3.9 per cent and Queensland's coal seam methane companies, which are banking on profiting from surging Asian energy demand, were hit harder.
Queensland Gas ended down 5.4 per cent and its LNG export rivals Sunshine Gas and Arrow were down 9.5 per cent and 7.3 per cent, respectively.
Takeover target Origin Energy was little changed, ending at $16.28, supported by a cash offer from British gas giant BG Group.
Origin chief executive Grant King will unveil Origin's response to the bid this morning. Santos also weathered the storm quite well, closing down 3 per cent.
The S&P/ASX 200 materials index, largely made up of miners but including steel makers and chemical makers, finished the day down 6.1 per cent, losing more than $20 billion in value, and the energy index lost about $5 billion.