US Markets inch lower over Nov. 14-18 trading week

U.S. markets showed a modest decline over the Nov. 14-18 trading week as mixed data on inflation and retail sales were balanced by positive earnings in both the consumer cyclical and technology sectors. The Dow Jones Industrial Average fell 2.17 points to 33,745.69 and the S&P 500 dropped 27.59 points or 0.7% over the week to 3,965.34.  

Shares of Gold Fields slipped 7% to US$10.58 as investors digested the aftermath of the company’s failed takeover of Yamana Gold. The previous week, the stock saw its biggest gain in two-and-a-half years on news the company was dropping its bid for Yamana, which instead signed an agreement with Agnico Eagle Mines and Pan American Silver for a cash-and-stock transaction worth close to US$5 billion. While Gold Fields was “disappointed” by the cancellation, it was “not prepared to be drawn into a bidding war” for a deal previously criticized by major shareholders. Gold Fields, which recently delivered stable financial guidance and gold production levels in its third quarter report, is now eligible for a US$300-million termination fee from Yamana.   

Rio Tinto shares rose 48¢ to a six-month high of US$65.19 during the week. The mining giant announced on Nov. 17 it had cancelled a deal to tie up support for its proposed US$3.3-billion acquisition of Turquoise Hill Resources after Quebec’s securities regulator raised concerns about the side deals with Pentwater Capital Management and SailingStone Capital Partners. Rio has been seeking control of Turquoise Hill since March when it launched its initial bid. It already owns a 51% interest in Turquoise Hill, but owning the company outright would give it direct controlling ownership of the Oyu Tolgoi copper-gold mine in Mongolia, in which the government also owns a stake. Rio has asked Turquoise Hill to hold a shareholder vote on the deal as soon as possible. The deal requires two-thirds to vote in favour of Rio’s all-cash offer of $43 per share.  

Shares of Lithium Americas nudged downwards 3.3% to US$25.04 amid wider discomfort with lithium stocks following a negative report from Goldman Sachs. While the bank’s analysts predict increasing profits for lithium miners in the near-term, rocketing production levels are set to fill the current demand gap as early as next year. And by 2025, the analysts forecast a glut of 400,000 tons of lithium in the market. On Nov. 14, Lithium Americas exercised common share warrants in Arena Minerals on Nov. 14,  paying US$2.7 million to push its stake in the company up to 19.99% from 17%. Toronto-based Arena has a proprietary processing technology for extracting lithium from the salt flats in northern Argentina.