Hellish week leaves all but one dazed, confused and treading water

TURBULENCE is too mild a word for it. The god of the markets grabbed the stock exchange in a mighty fist and rattled it like it was a snow dome.

By InvestSMART · 15 Jul 2012

By InvestSMART ·
15 Jul 2012

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TURBULENCE is too mild a word for it. The god of the markets grabbed the stock exchange in a mighty fist and rattled it like it was a snow dome.

There are growing fears that the one shiny spot in the global gloom - China - is starting to look a little tarnished. Could the Chinese dragon's insatiable appetite for our iron ore and coal be, well, satiable after all? The mere posing of that question sent the resources segment of the S&P/ASX 200 index streaking down 7.4 per cent.

Unable to resist such celestial forces, our racers were scattered to and fro. The market more broadly tanked 2.4 per cent after the banks only subsided slightly.

Resident moon unit Doreen Daze was the best performer of the week, losing a mere 1 per cent of her pile. AFR associate editor Philip Baker lost some ground on the leader but did enough to stay in silver-medal contention. With one week to go, does Phil dare to dream?

Lawyer Amy Dobbin had a dismal five days of trading, dropping from third to sixth. Amy has a volatile mix of stocks, which blew up in her face this week. Central Petroleum was up 14 per cent, but four other small resource companies went the same distance in the other direction.

That let Richard Pritchard step up to third and - whoa! What was that? Pottsy has left the other racers spinning as he explodes out of the basement and up four spots to be just outside medal contention.

Reader John Wyatt was looking good until BlueScope Steel yo-yoed back down again.

Luckily for John, musician Jason Contos couldn't capitalise after Green Rock Energy lost a full quarter of its market capitalisation.

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Frequently Asked Questions about this Article…

What caused the recent market turbulence described in the article?

The article attributes the sell-off to growing fears that China’s demand—the bright spot in global growth—for Australian commodities like iron ore and coal might be weakening. That concern sparked steep falls in the resources segment and broader market volatility.

How big were the falls in the resources sector and the broader ASX market?

According to the article, the resources segment of the S&P/ASX 200 plunged about 7.4%, while the broader market “tanked” roughly 2.4% during the week described.

How did the big banks behave during the market sell-off?

The piece notes that the banks “only subsided slightly,” implying they fell less dramatically than the resources sector and were not the primary driver of the week’s extreme moves.

Which individual stocks were highlighted for notable moves this week?

The article mentions Central Petroleum jumping about 14%, BlueScope Steel “yo-yoed” back down during the week, and Green Rock Energy lost a full quarter (around 25%) of its market capitalisation.

What does the coverage suggest about small resource company risk for everyday investors?

The article illustrates that small resource stocks can be highly volatile: one participant saw Central Petroleum gain 14% while four other small resource companies moved sharply lower, producing big swings in portfolio value.

What impact did the market moves have on the article’s portfolio contest participants?

The market turbulence mixed outcomes: Doreen Daze was the week’s best performer, losing only about 1%; Philip Baker slipped but stayed competitive; Amy Dobbin fell from third to sixth after volatile stock moves; Richard Pritchard rose to third; other entrants like John Wyatt and Jason Contos were set back when BlueScope and Green Rock Energy swung against them.

What lessons for everyday investors can be drawn from this week’s volatility?

From the article’s account, the key takeaways are that market sentiment—especially around China and commodity demand—can trigger sharp sector moves, and portfolios concentrated in small resource stocks can experience large, rapid gains or losses. The coverage underscores the value of being aware of sector concentration and stock-specific risk.

Is the slowdown in Chinese demand for iron ore and coal confirmed in the article?

No. The article reports growing fears that China’s previously insatiable appetite for iron ore and coal may be waning, and it shows how that concern sparked a sell-off. It does not claim a confirmed, fundamental slowdown—only that the prospect of weaker demand triggered market reactions.