A Weekly Recap of All Things Resources to Friday, August 9th

‘That’s a Wrap’

By Rod Blake

As investors, brokers, portfolio managers and traders closed down their terminals last Friday, August 2^nd – there was a collective realization that the previous optimistic tone of the markets had definitely changed. For months now – the major North American markets were drawing investors in on the premise that as soon as the U.S Fed lowered interest rates – then real bull market would begin, Then last week this “what could go wrong enthusiasm” was suddenly shattered when new economic figures came out that suggested that the American economy was teetering on the brink of a recession, so that dramatically lower interest rates may be needed to help the economy rather than the equity markets.

The way I see it – Markers can turn on a dime – or in this case – the release of economic indicators. I’ve seen markets tank many times going back to my early days as a broker, with the crash of 1987, the Great Recession of 2007 – 2009 and more recently the COVID-19 crisis of 2000. Each seemed to come out of nowhere and was completely unexpected, which is why as a broker I encouraged clients to take profits and raise cash during the bull markets so they could reinvest when markets turn such as last week. Whether this is a sharp overbought correction or the start of an extended bear market remains to be seen. Those fully invested will suffer but for those with cash to deploy may take advantage of this surprise sale.

Last Friday’s market rout spread to Asia and Europe over the weekend and then back to North America on Monday, with the Dow 30 closing down another 1,034 points (2.60^%) to close at a new 2^1/2-month low of 38,703, with the S&P 500 falling another 106 points (3.00^%) to a new 3-month closing low of 5,186 and the NASDAQ dropping 576 points (3.43^%) to close at a new 3-month low of 16,200.

Meanwhile – The CBOE Volatility Index or VIX surged up to close at a new 2-year high of 37.05.

The U.S dollar Index or ‘DXY’ dropped to a new 5-month closing low of 102.87.

Resource prices fell along with equities as –

Silver dropped to a new 3-month closing low of US$26.62 a troy ounce (t oz).

Copper fell to close at a new 6-month low of US$3.91 a pound (lb).

Lithium sank to a new 3^1/2-year closing low of US$10,941 a tonne (t).

Uranium closed at a new 8-month low of US$81.60 a pound (lb).

Zinc fell to a new 4-month closing low of US$1.17 a pound (lb).

The CRB Commodities Index sank to a new 5-month closing low of 319.

Caterpillar Inc. ‘CAT-N’ was the only resource oriented stock to go against the selling tsunami as the world’s largest heavy equipment manufacturer’s share price rose by $9.64 or 3.04^% to close at US$326.44 on the back of very strong 2^nd-quarter financials.

Canadian investors could only sit and watch Monday’s additional sell-off as the Canadian markets were all closed for the August Provincial Holidays. Tuesday proved to be very eventful with the TSX Composite and Venture Exchanges playing catch-up with their southern cousins. The TSX Composite faired pretty well only falling 248 points (1.12^%) to close at 21,979. Not so lucky for the TSX Venture as the resource weighted exchange dropped 13 points (2.32^%) to end Tuesday at just 543. The timid junior exchange has now given back all of the year’s gains to date.

When the dust had settled –

Endeavour Silver Corp. ‘EDR-T’ & ‘EXK-N’ closed at a new 3-month low of $4.13.

Hecla Mining Co. ‘HL-N’ and Impact Silver Corp. ‘IPT-V’ closed at respective new 4^1/2-month lows of US$4.74 and $0.21.

Taseko Mines Ltd. ‘TKO-T’ & ‘TGB-N.A’ and Hudbay Minerals Inc. ‘HBM-T & N’ closed at respective new 5-month lows of $2.60, and 9.53.

Lithium giant Albemarle Corporation stock ‘ALB-N’ fell to close at new 4-year low of US$97.06.

Lithium Americas Corp. ‘LAC-T & N’ closed at a new all-time low of $3.02..

Denison Mines Corp. ‘DML-T’ & ‘DNN-N.A’ closed at a new 9-month low of $2.04.

NexGen Energy Ltd. ‘NXE-T & N’ closed at a new 1^3/4-year low of 7.42.

Teck Resources Ltd. ‘TECK.B-T’ & TECK-N’ closed at a new 4-month low of $59.87.

Sherritt International Corp. ‘S-T’ closed at a new 4-year low of $0.20.

Snowline Gold Corp. ‘SGD-V’ closed at a new 9-month low of $3.98. The company continues to deliver exceptional diamond drill results. The latest from Hole V-24-075 returned 471.6 meters (m) averaging 2.38 grams per tonne gold (gm/t Au).

Victoria Gold Corp. ‘VGCX-T’ closed at a new all-time low of $0.46.

B2Gold Corp. ‘BTO-T’ & ‘BTG-N.A’ stock fell by $0.44 or 11.55^% to $3.37 when the company’s 2^nd-quarter financials and guidance failed to meet investors’ expectations.

IAMGOLD Corp. ‘IMG-T’ & ‘IAG-N’ shares’ rose by $0.78 or 15.35^% to $5.86 after the miner reported a better than expected 2^nd-quarter.

Western Forest Products Inc. ‘WEF-T’ closed at a new 14-year low of $0.405.

Suncor Energy Inc. ‘SU-T & N’ gained $2.23 or 4.38^% to $53.20 after the company beat analysts’ expectations with its 2^nd-quarter financial and production report.

The key Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs rose by 2-rigs in the past week to 588, down by 66-rigs from this time last year. Up north – the number of Canadian active rigs was down by 2-rigs to 217, up by 27-rigs from one year ago.  

Natural gas led commodities higher on the week, while uranium fell the most.

The North American markets were stable going into the weekend.

For the Week – the DJI lost 0.60^% to 39,498, while the S&P 500 fell 0.06^% to 5,344 and the NASDAQ was off 0.18^% to 16,745. Across the line – the TSX rose 0.37^% to 22,311 while the TSX Venture lost 3.24^% to 538. The CBOE Volatility Index or VIX lost 13.59^% to 20.35.

With currencies – the Canadian dollar gained 1.00^% to US$0.7284, while the U.S. dollar ‘DXY’ fell 0.07^% to 103.13. 

With commodities – gold bullion lost 0.25^% to US$2,431, while silver fell 3.79^% to US$27.42, as copper dropped 3.41^% to US$3.97, and lithium lost 3.82^% to US$10,941. Crude oil gained 3.96^% to US$77.00, while natural gas rose 9.64^% to US$2.16, as uranium fell 4.06^% to US$81.60. With soft commodities – lumber gained 4.37^% to US$526. Overall – the CRB Commodities Index was unchanged at 323.