U.S. equities edge higher, Jan. 16-20

Signs that Greece was nearing a deal with private bond holders and better-than-expected GDP growth in China were the key events marking the Jan. 16-20 trading week. China’s economy grew 8.9% in the fourth quarter of 2011, down from 9.1% in the third quarter, but still above analysts’ estimates, encouraging hope that China can avoid a hard landing. U.S. markets were closed on Jan. 16 for the Martin Luther King Jr. day holiday, but when they re-opened the Dow Jones Industrial Index climbed 2.40% to end the shortened trading week at 12,720.48. The S&P index rose 2.04% to 1,315.38. The Philadelphia Gold and Silver index fell 3.05% to 187.02, while the New York spot price for gold rose by US$27.30 per oz. or 1.67% to close at US$1,667.00 per oz. After falling by about 21% in 2011, copper prices touched a four-month high on Jan. 19.

Freeport McMoRan Copper & Gold closed US$1.10 higher at US$43.10 per share, despite reporting a 59% drop in fourth-quarter profit to US$640 million, or US$0.67 a share, down from US$1.55 billion or US$1.63 a share, in the year-earlier quarter. Revenue slid 26% to US$4.16 billion from US$5.6 billion. Freeport’s fourth-quarter copper sales were 823 million pounds, below the 941 million pounds of copper sold in the fourth quarter of 2010.

Shares of BHP Billiton jumped US$3.20 per share to US$78.15 on news that the company booked nearly a 700% increase in resource tonnage at its Spence copper mine in Chile. The company reported on Jan. 17 that the total oxide resource grew to 64 million tonnes at an average grade of 1.01% copper with a total resource of supergene sulphide at 222 million tonnes grading 0.91% copper.

Shareholders of U.S. Gold and Minera Andes voted to approve the merger of the two companies, which drove the shares of both companies higher. U.S. Gold gained 18% to close at US$4.98 per share while Minera Andes advanced 17.9% to close at US$2.23 per share. 

On the negative side of the ledger, shares of  Kinross Gold plunged 19.2% or US$2.44 to end the week at US$10.21 per share. The gold producer announced that about six to nine months of additional analysis and planning are required to determine the optimum processing mix for its Tasiast deposit in Mauritania. It also said feasibility studies at its Fruta del Norte project in Ecuador and Lobo-Marte project in Chile would also be delayed in order to optimize capital costs.