U.S. markets slump as gold rises, April 7-11

It was a weak showing for the U.S. markets, as the Dow Jones Industrial Average fell 388 points to 16,026.75, the S&P 500 was down 48 points to 1,815.69 and the Nasdaq Composite was off 111 points to finish up at 3,999.73. 

The selling was most severe in the tech sector, as earnings expectations turned so bearish that analysts predicted zero annual profit growth for companies in the S&P 500.

Metal prices, however, were slightly higher, with copper up 2¢ to US$3.05 per lb. and gold gaining US$15 to US$1,319 per oz. The strength in base metals could be tied to an International Monetary Fund report saying the global economy has turned the corner and is heading for more robust growth. The Fed also commented that quantitative easing would taper more gradually than previously anticipated.

Randgold Resources, AngloGold Ashanti and Royal Gold benefitted from the renewed interest in gold, with each seeing its share price rise in the period. 

Alcoa’s stock was the most actively traded, falling 9¢ on 180.7 million shares traded. The increased volume foreshadowed buying, as shares climbed at press time on the back of better-than-expected first-quarter earnings. The company reached record downstream profitability, tripling its results in the midstream, as well as bolstering its upstream business for the tenth quarter in a row. These factors helped Alcoa beat its 5¢ earnings-per-share estimate by a decent margin, as it reported earnings of 9¢ per share.

A pair of China-based miners — Aluminum Corp. of China and Yanzhou Coal Mining — were among the period’s big gainers.  Aluminum Corp. of China saw its stock rise 13% to $10.15 amid rumours that it would issue a perpetual renminbi bond. 

Yanzhou Coal Mining was up 11% to US$8.41, as the market speculated that it would abandon plans to buy out Yancoal Australia, in which Yanzhou holds a 78% stake. Yanzhou had announced a plan to buy the remaining interest and take the company private last July. The prospect of saving capital was applauded by the market.

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