Tuesday, May 4, 2010

BHP Billiton (ASX:BHP), Rio Tinto (LON:RIO) Fall on China Fears, Sovereign Debt Concerns

In a very short time, resource companies like BHP Billiton (ASX:BHP) and Rio Tinto (LON:RIO) have fallen on not only the obvious concerns of the sovereign debt crisis in Europe, but possibly even more important, the apparent cutback by China in their housing market could result in demand for commodities to fall.

Suddenly everyone that has been citing China as the reason for confidence in growth going forward has to reevaluate their businesses and possibly readjust their estimates for revenue and earnings.

Oh yeah, then there's the misguided 40 percent levy by the Rudd government which has disrupted the markets for mining companies with a large presence there, and could end up being a disaster.

So overall, in just a couple of weeks or less, optimism on earnings and revenue have plummeted to companies again taking a more defensive posture in a quickly changing economic environment.

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