Poor jobs data torpedoes U.S. equities, Apr. 1-5

The S&P 500 hit an all-time closing high early in the trading week (1,570.25 on Apr. 2) but disappointing jobs data released on Apr. 5 sent the index down 1.0% for the week to 1,553.28. The Dow Jones closed down 0.10% at 14,565.25. The Labor Department reported that the U.S. economy produced 88,000 new jobs in March, the weakest pace of hiring in nine months and far fewer than many economists had forecast. The jobs data contributed to the biggest weekly decline for share prices so far this year.

Shares of  Mountain Province Diamond were up US$0.30 or 6.8% at US$4.69 after the company updated investors on progress at Gahcho Kué. The company and De Beers, its joint-venture partner, said they are confident that the project will receive a mine licence and announced that they will be drilling new exploration targets there with the first phase expected to be completed before the end of April. They also reported that winter deliveries of material, equipment and fuel were all delivered by the end of March.

Vale gained on bets that it may avoid paying about $15 billion in taxes on earnings from its overseas operations. Brazil’s Supreme Court has postponed a ruling on the case for another week. Shares of Vale gained US$0.04 per share or 0.2% to close at US$17.33.

Molycorp advanced US$0.03 or 0.5% to US$5.23 on no news, after mining analyst Jon Hykawy of Byron Capital Markets published a bullish note on the company with a Buy rating, a target price of US$15.00 per share, and arguments that the “time to buy is sooner than later.” Hykawy noted that Molycorp can produce a kilogram of rare earth oxide once all new equipment is in operation at Mountain Pass for about US$7 per kg, while Neodymium oxide sells outside of China for about US$74 per kg.  “At 11,000 tonnes per annum of annual REO production, and roughly 449 tonnes per quarter of potential didymium production, Molycorp could generate some $30 million in cash flow,” he wrote. Hykawy also pointed out that because Molycorp can also make magnet alloy for bonded magnets, the company “can take a kilogram of Nd2O3 and effectively generate at least 2.5 kg of alloy. The alloy sells for perhaps $45 per kg, with content that probably costs no more than $7 per kg.”

On the negative side of the ledger, shares of Cliffs Natural Resources continued their downward spiral, on no news, falling US$0.56 per share to end the week at US$18.45.