The Top40 and Alsi have been in what appears to be free-fall today, as BHP Billiton’s earnings miss forecasts, and the announcement that it is splitting off nickel, aluminum and other assets into a new company that could be valued at more than US$20 billion. However, we see this move as majorly over done, as earnings missed by a mere 0.7 percent, and current moves based on the company split are still speculative.
Nevertheless, Billiton is the single largest weighting in the Top40 index, at over 13 percent, meaning that a 1% move in Billiton represents 60-odd points on the Alsi. As such, the 5% sell off that we have seen today, represents a total of over 300 points on the Alsi, and captures in entirety the negative move we have seen on the index for the day so far.
Unlike today’s results, the comapny’s first half results were very positive, surprising to the upside by 8.9 percent. This divergence lead technical trader, Karin Richards (@Richards_Karin), to rather fittingly, call Billiton “a tale of two halves”
