TSX hits ‘wall of worry’, Feb. 8-12

It was a volatile week, as investors — worried about the state of the global economy — fled stocks and sought safe-haven assets like gold, driving the price up 5.5% to US$1,237.90 per oz. (Gold hit a one-year high of US$1,262.90 per oz. on Feb. 11, and the S&P/TSX Global Gold Index climbed 9.7% to 180.84.)

The trading period saw Canada’s main stock index hit a three-week low but rallied at close, in sync with a 12% jump in U.S. crude oil prices to US$29.44 per barrel. Higher oil prices lifted the Canadian dollar to US72.14¢. The S&P/TSX Composite Index was down 2.99% to 12,381.24, and the S&P/TSX Capped Diversified Metals & Mining Index dropped 4.6% to 291.68.

Agrium shares fell $5.47 to $114.37 during the week, despite strong financial results. Full-year net earnings from continuous operations in 2015 reached US$988 million, or US$6.98 diluted earnings per share, compared with 2014’s US$798 million, or US$5.51 diluted earnings per share. Adjusted net earnings in the fourth quarter were the second highest in the company’s history, at US$209 million, or US$1.52 per share.

The company noted that despite the weak macroeconomic environment, it expects  growers in North America and other major agricultural markets will plant historically high crop acreage in 2016, supporting demand for its crop nutrients. The company also forecast that in the U.S., growers will increase overall crop acreage, and noted that outside of the U.S., weak domestic currencies have led to attractive domestic crop prices, which could also support planted acreage.

Potash Corp. of Saskatchewan’s shares slid $1.90 to $21.37 per share. In a market overview published on Feb. 10, the company said worldwide potash shipments declined 5% last year to 60 million tonnes (although this was still the second-highest year on record after 2014), and noted that demand in granular markets, mostly from the U.S. and Brazil, were most impacted.

The company forecasts that global shipments this year will reach 62 million tonnes. The major miner also pointed out that “cautious buying patterns” in 2015 resulted in deteriorating prices in potash, nitrogen and phosphate.

Imperial Metals was down 79¢ to $4.20 per share in the wake of a decision to suspend operations at the Huckleberry mine and place the operation on care and maintenance until the copper price improves.

The suspension will go into effect as soon as the stockpiles have been milled, which could take until August 2016. The mine, located in west-central British Columbia, is owned and operated by Huckleberry Mines, in which Imperial owns a 50% stake. The other half is owned by Japan Group, which consists of Mitsubishi Materials Corp., Dowa Mining Co. and Furukawa Co.