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rI at the close, April 25, 2012

By · April 25, 2012 · 3:24 pm · Leave a Comment

 

At the close today, the S&P/TSX Composite Index  rose 1.1% to close at 12,111.06, with the S&P/TSX Capped Diversified Metals and Mining Index up 3.1%, and the S&P/TSX Capped Materials Index rose 2.8%.

Shares of Potash Corp. of Saskatchewan (TSX:POT)were the top large-cap gainer with shares up 3.9% ahead of the fertilizer producer’s first-quarter earnings report on Thursday. A competitor, Mosaic Co., rose 5.39% on rapid acceleration in demand for potash and phosphate fertilizers. Use our Investor Search (http://rianalytics.com/conference_planner) to look up other potash stocks.

Other hot stocks included Teck Resources Ltd. (TSX:TCK.B) up 2.7% and Agrium Inc. (TSX:AGU) gaining 3.2%, respectively.

Encana Corp. saw a 4% gain after it jumped to quarterly profit on commodity price hedging gains. Other gainers included NovaGold Resources Inc. (TSX:NG) up 8.42%, First Quantum Minerals Ltd. (TSX:FM) up 5.92% , Yamana Gold Inc.(TSX:YRI) up 3.91%, Silver Wheaton (TSX:SLW) up 3.84%, and Canadian Natural Resources (TSX:CNQ) which climbed 3.42%.

The Fed to stay the course

Elsewhere in the news, the US Federal Reserve announced that it would stay the course of very low interest across the board.  Consistent with its statutory mandate, the Fed noted, “the Committee seeks to foster maximum employment and price stability. The Committee expects economic growth to remain moderate over coming quarters and then to pick up gradually.”

“To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.”

The Financial Post noted that Derek Holt and Dov Zigler, economists at Scotia Capital Markets point out that the Bank of Canada should not raise rates because of growing household debt concerns, because debt levels are already on the way down. “Instead of hiking to cool debt growth on inflation concerns, perhaps monetary policy will have to remain accommodative for a long time yet as households show signs of having exhausted their peak penchant for debt growth and with it their appetite for rapid growth in housing and consumer markets after a long party following the troubles of the 1990s,” they said in a note on Wednesday.

Another argument for not raising rates lies in the fact that much of the world is still struggling and any rise in rates may stifle Canada’s growth.

To some extent, the continued pullback in the economy is the result of uncertainty, ostensibly led by ongoing turmoil in Europe. The UK’s economy has fallen into its second recession since the financial crisis after a shock contraction at the start of 2012, notes the Globe and Mail.

Britain now joins Belgium, the Czech Republic, Greece, Italy, the Netherlands and Spain in this unenviable position.

The New York Times notes: “Except for Germany, most European countries do not have the financial leeway to pump up their economies with public works projects or other government spending, economists say. Leaders are groping for ways to encourage growth with the limited means at their disposal.”

The Globe also noted that while Sherritt International took a beating in first quarter earnings compared with the same period a year ago, Desjardins Securities argues that nickel may present a buying opportunity at present.

“Since peaking at $9.90 (U.S.) a pound on Feb. 9, the nickel price has declined 24 per cent to $8, which is just below where it started the year. It’s a pretty shabby performance considering the London Metal Exchange Index, made up of six industrial metals including copper and aluminum, is up about 7 per cent year-to-date. Nickel, in fact, is the only major metal that is trading below exit levels for 2011.”

They point out that there are signs nickel is heading for an uptick:

  • The price for nickel on the LME is trading at or below domestic prices in China which will make buying Western world-produced nickel more attractive than buying domestic nickel in China
  • Chinese also may end up buying more western nickel because current nickel prices are below cash production costs for several Chinese producers of pig iron, which increasingly competes with Western nickel supplies.
  • Stainless steel demand may also be rebounding, with data suggesting increases in shipments in January over same period a year ago.


None of this helps Sherritt shareholders however, which said Wednesday it earned $32.3-million or 11 cents per share in its latest quarter compared with a profit of $63.6-million or 22 cents per share a year ago.

“Continued pressure on input commodity costs, combined with lower realized nickel and cobalt prices, adversely affected the margin in metals, which was partially offset by stronger results from oil and gas,” Sherritt president and chief executive David Pathe said in a statement.

Top Gainers in TSX

Rockgate Capital Corp. RGT:TSX  0.15 (28.30%)
Cline Mining Corporation CMK:TSX  0.11 (13.25%)
CGA Mining Limited CGA:TSX  0.26 (13.13%)
Avion Gold Corporation AVR:TSX  0.09 (10.98%)
Extorre Gold Mines Limited XG:TSX  0.40 (10.13%)

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Top Gainers in TSX Venture

Nubian Resources Ltd. / Formerly as ICS Copper Systems Ltd – Feb 8, 2011 NBR:TSX VENTURE  0.06 (38.71%)
Regal Energy Ltd. REG:TSX VENTURE  0.25 (36.23%)
Paget Minerals Corp. PGS:TSX VENTURE  0.04 (33.33%)
Pachamama Resources Ltd. PMA:TSX VENTURE  0.15 (27.27%)
NV Gold Corporation NVX:TSX VENTURE  0.03 (26.09%)

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Top Losers in TSX

New Dawn Mining Corp. ND:TSX  0.15 (14.71%)
Metalore Resources Ltd. MET:TSX  0.52 (9.74%)
Wesdome Gold Mines Ltd WDO:TSX  0.12 (8.63%)
Lithium Americas Corp. LAC:TSX  0.08 (6.20%)
Seabridge Gold Inc SEA:TSX  0.90 (5.25%)

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Top Losers in TSX Venture

Bonaparte Resources Inc. BON:TSX VENTURE  0.09 (40.91%)
Canadian Silver Hunter Inc. AGH:TSX VENTURE  0.09 (35.42%)
Nomad Ventures Inc. NMD:TSX VENTURE  0.06 (27.50%)
Northquest Ltd. NQ:TSX VENTURE  0.09 (25.71%)
Josephine Mining Corp. / Formerly as Green Park Capital Corp. JMC:TSX VENTURE  0.04 (25.00%)

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