Tough times for U.S. equities, Apr. 15-19

U.S. stocks kicked off the Apr. 15-19 trading week on Monday by posting their worst day since Nov. 7, 2012 (the day after the U.S. presidential election) with the Boston bombings, lower-than-expected Chinese GDP growth in the first three months of 2013, and a tumbling gold price accelerating a selloff in equities. About 8.4 billion shares changed hands on U.S. exchanges that day and the New York spot price for gold fell to a two-year low of US$1,352.60 per oz. On Thurs. Apr. 18, the S&P 500 ended below its 50-day moving average (1,543.04) for the first time in 2013, and for the full week dropped 2.12% to 1,555.25 (its worst percentage loss since November 2012). The Dow Jones Industrial Average fell 2.14% to 14,547.51 and the Philadelphia Gold and Silver index lost 11.58% to close at 102.89.

Shares of Walter Energy plunged 27.4% or US$6.62 to US$17.49 per share. The Alabama-based coal producer’s board is fighting a British hedge fund’s attempts to nominate five new members to the board. In February, Audley Capital said that following Walter Energy’s acquisition of Western Coal Corp. in late 2010, the company has “consistently failed to deliver shareholder value as a result of questionable financial decisions and poor management.” On Apr. 15, ISS, an independent proxy voting advisory service, recommended to shareholders that they vote for all of Walter Energy’s nominees. Glass Lewis, another proxy voting advisory service, endorsed the company’s candidates on Apr. 12.

BHP Billiton shares fell US$4.88 to US$64.19 per share. On Apr. 18 the company’s new chief executive, Andrew Mackenzie, announced a revamped senior management team, which BMO Capital Markets analyst Tony Robson said in a research note “has resulted in some surprising departures, as well as partially stripping out a layer of management that allows the major divisional heads to report directly to the CEO.” Overall, he wrote, “the moves have resulted in the loss of experienced executives from BHP, but perhaps allows for renewed focus and a greater emphasis on cost cutting by the new divisional heads.” The  analyst also speculated that the appointment of Tim Cutt as the company’s new head of petroleum and potash, two areas that “have no obvious synergy,” also “suggests BHP will proceed with the Jansen project.” Separately, BHP reported that it is retaining full-year production guidance for its major businesses following another quarter of robust operating performance. Copper-in-concentrate production at Escondida, for example, increased by 61% during the nine-month period ended March 2013, and BHP forecasts that total Escondida copper production is on track to increase by at least 20% in the 2013 financial year.  

Kimber Resources rose 29.4% to US$0.22 per share. The junior announced it was appointing board member James Puplava, the company’s largest individual shareholder, to the position of chairman. Puplava noted in a press release that to further advance the Monterde gold-silver project, management has “streamlined the board structure, reduced monthly operating costs by more than 40% since year-end 2012,” and “taken voluntary pay reductions.”