Australia’s big three miners were on track to lose more than A$16 billion ($11.12 billion) in combined market value. As a commodities selloff over, it eased China’s demand, and fears of a global recession deepened. Rio Tinto’s Australia-listed shares (RIO.AX) would have shed nearly A$2 billion in value BHP (BHP.AX). More than A$10 billion, and Fortescue Metals (FMG.AX) over A$4 billion.
Lower output from Chinese steel mills has hit demand for iron ore. While prices of commodities like copper and aluminium have slumped on worries that aggressive interest rate hikes by the U.S. Federal Reserve’s and other central banks could tip the global economy into a recession.
The three Australian mining behemoths, so far this month, have already lost roughly A$30 billion of their combined market value, and are facing a third straight week of losses after hitting multi-week lows on Monday.
Currently, Rio Tinto and BHP are trading at a one-month low, while Fortescue is at a three-month low.
“Are we doomed? Or is it darkest before dawn?” Jefferies analysts wrote on Saturday regarding recent economic data, China’s COVID-19 lockdowns and the Fed’s policy narrative.
They seemed to lean towards the latter, confident that a recovery that miners would lead would follow the slowdown in demand for commodities, adding that recession fears and inflation would give way to recovery.
Analysts at JP Morgan also echoed risks to the sector but said fresh policy support along with easing COVID-19 lockdowns in China would spur a rebound in the second half of 2022, and maintained their “neutral” view on Rio Tinto and BHP.