US equities wobbly on recovery concerns, Aug. 16-20

New claims for U.S. unemployment benefits climbed to a nine-month high during the Aug. 16-20 trading week, fuelling uncertainty about the overall economic outlook and sending gold prices higher. The Dow Jones Industrial Average slipped 0.87% or 89.53 points to finish at 10,213.62, while the S&P 500 index lost 0.70% or 7.56 points to close at 1,071.69. Spot gold prices rose 1% during the period, closing in New York on Aug. 20 at US$1,228 per oz. after reaching a high of US$1,237.15 per oz. on Aug. 19, the highest price since July 1. The Philadelphia Gold and Silver index gained 3.3% or 5.73 points to finish at 178.13.

BHP Billiton’s surprise US$39 billion (US$130 per share) all-cash bid for Potash Corporation of Saskatchewan and speculation that other suitors will start coming out of the woodwork soon for the potash producer dominated the headlines and pushed up the company’s share price by US$38.33 or 34.4% to end the week at US$149.67. Potash Corp.’s board is urging shareholders to reject BHP’s bid and said it was in talks with several other companies for a more attractive offer. Of those, Bloomberg News has reported that China’s Sinochem Group and Brazil’s Vale have made initial inquiries. The buzz about Potash Corp. sent prices of other potash producers up too, including Mosaic, which advanced US$5.44 to US$56.64 per share (the second-biggest value gain of the trading week). Mosaic was the third most actively traded stock.

Randgold Resources posted the third-largest value gain of the week, adding US$4.75 per share to reach US$90.63. Earlier this month the gold company reported a profit increase of 52% for the quarter ended June 30 over the previous quarter, and a 92% increase over the year-ago quarter. Its profits for the six months were up 88% year-on-year. The company also raised its production guidance at the Tongon mine in Cote d’Ivoire by about 10%, because commissioning of the plant is ahead of schedule. It also said it hopes to bring forward by six months to mid-2011 the start of construction of its Kibali project in the Democratic Republic of Congo.

On the negative side of the ledger were BHP Billiton, down US$3.84 to US$67.44 per share, and SinoCoking Coal, which posted the largest drop of the week with a decline of US$4.35 per share to US$12.33.