U.S. equities enjoy mini-rally, Jun 4-8

U.S. equities rallied late in the June 4-8 trading week as markets anticipated that Spain would ask euro zone deputy finance ministers for a bail-out for its troubled banks, which it did over the weekend. The Dow Jones Industrial Average and the S&P 500 posted their biggest percentage weekly gains since December, with the DJIA rising 3.6% or 435.6 points to 12,554.20 and the S&P 500 advancing 3.7% or 47.6 points to 1,325.7. The Philadelphia Gold and Silver index barely budged—slipping from 162.71 points to 162.10, a drop of 0.4%.

Royal Gold topped the week’s list of value gains with a bounce of US$4.36 to US$79.11 per share on no news, underscoring the fact that markets currently seem to favor royalty companies, which fund projects in return for a portion of future revenues, over traditional gold miners, whose share prices so far this year have generally failed to keep pace with advances in the gold price.

On the fertilizer front, shares of Agrium climbed US$3.95 to US$79.49 per share on news that its board of directors had approved a US$0.275 per share increase to its semi-annual dividend declared on May 11.  The dividend will be US$0.50 per share and will be paid to shareholders of record on July 12. The company’s chief executive, Mike Wilson, said the increase highlighted the strength in Agrium’s earnings outlook for both retail and wholesale operations.

Alpha Natural Resources was the third most actively traded stock, sinking US$1.11 per share to close at US$9.32 after the company announced that it would discontinue mining at four of its mines and idle two coal preparation plants in Kentucky, while scaling back production at several other mines. It is also shutting down four of its contract mines. Declining demand for thermal coal—mostly due to the mild winter—and a wave of electric utilities that are switching from thermal coal to cheaper natural gas, were the primary factors in the decision. In its most recent quarterly earnings announcement, the company also said future sales would be hit by a series of regulatory actions on clean air by the U.S. Environmental Protection Agency. About 150 jobs will be lost due to the production cuts, and the company will reduce its shipments of thermal coal by 2 million tons in 2012 and by 4 million tons next year. The company believes the measures should result in savings of between US$50 million and US$60 million a year.