U.S. markets, July 29-Aug. 2

Mixed jobs data and comments from the U.S. Federal Reserve that it would keep buying US$85 billion per month in Treasury and mortgage securities were the main headlines during the trading week. Non-farm payrolls rose by 162,000 in July, which was below expectations, while the unemployment rate fell to 7.4% — the lowest level in more than four years. The Dow Jones Industrial Average edged 0.6% higher to 15,658.36, while the S&P 500 Index climbed 1.1% to 1,709.67. The Philadelphia Gold and Silver Index tumbled 6.6% to 94.19.

News that Russia’s Uralkali quit one of the world’s two big potash cartels, which support prices by limiting supply, hit potash producers hard. Forecasts that the move would push potash prices down by 25–40% sent shares of Mosaic and Potash Corp. of Saskatchewan reeling. Mosaic plunged 21.7%, or US$11.38 to US$40.98 per share, while Potash Corp., the most actively traded stock of the week, dropped 22.1%, or US$8.24, to US$28.91.

Shares of Newmont Mining fell US$1.59 to US$28.79. Lower gold and copper prices on long-term assets at Boddington and Tanami, in addition to stockpiles and ore on leach pads, resulted in a non-cash impairment charge of US$1.8 billion in the second quarter. Newmont posted a second-quarter net loss attributable to shareholders of US$2 billion, or US$4.06 per share.

Alpha Natural Resources fell US59¢ to US$4.95, as challenging market conditions — including oversupply, lower prices, cheap natural gas and increased environmental regulation — took a big bite out of margins at its operations in Appalachia. The U.S. coal producer posted a pre-tax impairment and restructuring charge of US$2.5 billion in the quarter ended June 30. Alpha reported a quarterly net loss of US$186 million, or US84¢  per diluted share, compared with a net loss of US$2.2 billion, or US$10.14 per diluted share, in last year’s second quarter.

On the positive side, Cliffs Natural Resources climbed US87¢ to US$20.58. The company reached a tentative agreement during the week with the United Steelworkers Union for a three-year labour contract for 300 workers at its Bloom Lake mine in Fermont, Que.

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