Fears of a slump in demand for iron ore resulted in mining stocks taking a hit this week, as the reality of a massive oversupply of Chinese steel became apparent.
Benchmark iron ore prices fell to $US90 a tonne on Thursday, and by yesterday had fallen to $US88.70, levels not seen since the financial crisis. They peaked at around $US190 a tonne last year and were at $US134 a tonne as recently as two months ago.
That meant mining stocks took a hit on Thursday, but by yesterday shareholders were snapping them up, buying names like Rio Tinto after it dipped below $50 for the first time since mid 2009.
Over the week, Fortescue Metals lost 44?, to $3.54. The group chairman, Andrew Forrest, spent nearly $39 million in two days to increase his shareholding in the mining company he founded, helping its share price to stabilise.
For the week, the benchmark ASX200 index lost 32.8 points, or 0.75 per cent, to 4316.1 points.
Over the month-long profit reporting period, BHP Billiton's scrapping of the $30 billion Olympic Dam mine expansion, Qantas's first loss since privatisation and Fairfax's write-down driven $2.7 billion loss delivered the biggest horror headlines.
But the Commonwealth Bank delivered its biggest-ever profit of $7.1 billion and BHP its second-biggest with $US15.4 billion ($15.02 billion). And before a slump in iron ore prices hit some mining stocks, miners and mining services companies generally performed well, including a record profit for Fortescue Metals.
By yesterday market watchers had became increasingly excited about a meeting of central bankers in the US, an annual symposium in Jackson Hole, Wyoming.
The US Federal Reserve chairman, Ben Bernanke, was due to speak last night Sydney time. This time last year he used the event to foreshadow a second round of quantitative easing. The prospect of a repeat performance excited the markets.
For the week, BHP Billiton lost $1.30, to $31.79, as the company sold its Western Australian Yeelirrie uranium deposit to Canada's Cameco Corporation for $US430 million ($414.24 million).
Newcrest Mining fell $2.55 to $24.65. Australia's largest goldminer suspended production at its flagship Lihir mine in Papua New Guinea amid a dispute with landowners.
Transfield Services fell 19.5? to $1.835 as the head of the construction and maintenance firm stepped down after turning a full year loss into a healthy net profit of $84.8 million.
Perpetual fell 73? to $26.48 as the fund manager announced more job cuts as it continues with a major restructure that contributed to a 57 per cent drop in its full year profit.
Flight Centre rose 41? to $23.90. The travel operator said it expects to boost the number of its outlets around the world by up to 8 per cent and add 1000 new sales staff to its global workforce.
Toll Holdings rose 8? to $4.63. The transport and logistics group said resolving problems in its business in Japan and its marine shipping operations in Asia are its current priority.
WorleyParsons rose 4? to $2.52. The giant engineering company says the slowdown in the Australian resources sector has had a relatively minor effect on the global company.
Seven Group Holdings rose 84? to $8.12 after the media and earthmoving-machinery company said strong activity in the resources sector was likely to continue.
ALL ORDS AUSTRALIA.
AUG 24 TO AUG 3