3 ASX stocks punished by the market today

ASX drops 0.3%, despite the Dow Jones closing above 14,000 for the first time in five and a half years on Friday

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published February 4, 2013 3:34 pm AEDT

The S&P / ASX 200 Index (Index: ^AXJO) (ASX: XJO) has dropped by 0.3% to close at 4,907.5 today. That's despite the Dow Jones index rising more than 1% on Friday, and closing above the psychologically important (but otherwise unimportant) level of 14,000 for the first time since October 2007.

The Australian dollar is stronger against the US dollar, currently buying around 104.2 US cents.

These three stocks were among the worst performers in the ASX 200, falling more than 3%.

Discovery Metals Group (ASX: DML) fell more than 8% to close at 95.5 cents. Despite having a takeover offer on the table at $1.70 per share from a Chinese private equity suitor, investors appear to have taken the view that the bid for the emerging copper producer is unlikely to go ahead. Discovery may have also fallen afoul of investors due to higher than expected operating costs and other issues at its flagship copper mine in Botswana.

Silver Lake Resources (ASX: SLR) lost 7.4% to end at $2.37, with the company's shares following the sliding gold price – which is mainly due to investors being more optimistic about a US economic recovery. Mostly upbeat US data has taken the shine off the metal, which is generally in high demand when economies are turning sour. At current prices, Silver Lake appears cheap considering production is forecast to more than quadruple to 400,000 ounces of gold in 2014.

Aquila Resources Limited (ASX: AQA) dropped 3.9% to end at $3.00, after the company announced that it had put its $7.4 billion iron ore project on hold at least until the end of June, due to funding difficulties. At the same time, iron ore giant, Rio Tinto has had a $3 billion expansion of its Nammuldi iron ore mine approved by the West Australian government, which goes to show that smaller iron ore miners are most at risk of falling iron ore prices, while the biggest can keep adding more supply.

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