U.S. markets rise; miners lag

Equities continued to be the destination for large capital flows south of the border as all three of the U.S.’s most watched indices were higher for the Feb. 25 to March 1 period.

The Dow Jones Industrials Average was up 253 points to 14,253.77 points; The S&P 500 was up 24 points to 1,539.79 and the Nasdaq was up 44 points to 3,224.13 points as investors continued to shun the low yields in the debt market in favor of stocks.

The fervor for equity was, however, tempered somewhat at the end of the period due to expected budget cuts in the U.S. and a cooling Chinese housing market.

Despite the gains being made in the broader market, mining companies continued to struggle as evidence by the recent downward trajectories of firms representing a basket of different metals. Aluminum producer Alcoa was off 20 cents to US$8.44, copper producer Freeport McMoRan was off 96 cents to US$31.49 and gold producer Newmont Mining was off US$1.20 to US$39.62.

But it was American coal producers who felt the brunt of investor disfavour. Peabody Energy was off US$2.12 to US$20.56 and Alpha Natural Resources was off 99 cents to US$7.68 for the period. The selling came as prices of Central Appalachian coal slipped to their lowest levels since mid-February.

The one mining sector managing to find some investor interest was potash. Both Agrium, up $3.26 to $104.39 and Mosaic, up $1.00 to US$58.47, continued their recent strong runs. The buying has come on the back of the expectation that poor crop yields last year will result in farmers planting more this year, and thus consuming more fertilizer.

Harry Winston Diamond shares also moved higher climbing 68 cents to US$15.56. The company is selling its luxury retail unit to Swatch Group and plans to hike prices for its jewelry in Japan as the government there continues to devalue the currency. The yen hit a three-year low during the period, and that makes import items like jewelry more expensive. Japan is second only to the U.S. in terms of the size of its market for luxury items and accounts for roughly 12% of the company’s revenue. Harry Winston said the price increase will occur in late March.

And Sociedad Quimica y Minera (SQM) shrugged off disappointing quarterly results and an analyst downgrade as its shares managed to gain 62 cents to finish the period at US$55.40. The fertilizer and chemical company reported fourth quarter earnings of US$141.8 million which was down from the US$158.9 million it reported a year ago. Bank of America downgraded the company’s stock from Buy to Neutral citing weaker potash prices going forward and more competition on the lithium and iodine fronts.