US markets seesawed in June 7-11 trading

Comments from the World Bank that a double-dip recession cannot be ruled out and nagging worries about the debt crisis sweeping Europe caused U.S. markets to seesaw in the first three days of the June 7-11 trading week. U.S. equities ended the week up for a second straight day on Friday, however, despite disappointing economic news that sales at U.S. retailers had fallen in May for the first time in eight months. That data seemed to jar with news the same day that an unidentified participant in an E-bay auction had bid US$2.63 billion for a steak lunch with billionaire investor Warren Buffet. The bid exceeded the previous record set in 2008 of US$2.11 million – a sign perhaps that things may be reverting to “normal” on Wall Street. The Dow Jones Industrial Average closed at 10,211.07 points, up 4.02%, while the S&P 500 index rose 3.92% to finish at 1,091.60. The Nasdaq Composite index climbed 3.21% to 2,243.60. Gold closed the week at US$1,227.50 per oz., while the Philadelphia Gold and Silver index gained 3.06 points to 175.31.

A Reuters story June 11 quoting Australia’s Herald-Sun newspaper saying that the Australian government “plans to announce major changes” to its proposed resources profit tax “in coming days,” sent shares of BHP Billiton up US$5.57 to US$65.28 and Rio Tinto US$3.41 higher to US$47.29. Prime Minister Kevin Rudd has refuted suggestions that the government was about to make changes to the proposed tax.

Cliffs Natural Resources ranked first in the list of value gains with an increase of US$6.75 per share to US$55.97. The iron ore giant revealed on June 7 that while it remained firmly committed to its previous offer for Spider Resources, which expires on July 6, it was reviewing its options about whether to make a formal offer for KWG Resources. That’s because a day after Cliffs announced it was bidding for KWG, the junior said it had already entered into a binding letter of agreement to merge with Spider. Cliffs is trying to win control of the Big Daddy chromite deposit in northern Ontario.

Finally, junior explorer Elray Resources topped the charts with an advance of 200% or 2¢ to 14¢ per share on no news. In April, Elray Resources confirmed that the “infrastructure was in place” for “aggressive development” of its Picacho property in southeastern Ecuador. Elray also owns Porphyry Creek, a gold and copper property about 290 km north of Phnom Penh.