‘That’s a Wrap’
By Rod Blake
The trading week began quietly with the American brokers, traders and portfolio managers enjoying their much needed Memorial Day long weekend. Meanwhile their Canadian counterparts were at their posts – wondering if last week’s first market gains in the past two-months’ were the start of the next market rally or just a dead cat bounce.
Farmers may have seen the peak in fertilizer prices as Green Markets reports that the June spot price for nitrogen fertilizer ammonia has dropped by 30% in the past month to US$1,000 per tonne.
Crude oil rose to US$117.24 after the European Union (EU) announced its members would endeavour to ban 90% of Russian oil imports by the end of the year. Only Hungary will receive some Russian oil.
The lag-time of deciding to build an electric vehicle (EV) battery facility and then sourcing the minerals to run them was put into perspective by Global Lithium LLC’s Joe Lowry – “Tesla can build a gigafactory in about 2-years, cathode plants can be built in less time, but it can take up to 10-years to build a green-field lithium brine project.”
The gold sector had a major takeover that the market didn’t like as the share price of Yamana Gold Inc. ‘YRI-T’ & ‘AUY-N’ rose by only $0.05 or 0.74% to $6.80 and the price of Gold Fields Ltd. ‘GFI-N & J’ fell by $2.86 or 23.44% to US$9.34 on the announcement that South African based Gold Fields was taking over Canada’s Yamana in a friendly all stock deal of some US$6.7-billion.
Cenovus Energy Inc. ‘CVE-T & N’ made many Newfoundland & Labrador workers very happy after the Canadian diversified crude oil producer announced it will reopen the 80,000 bbls/d offshore West White Rose Project in first half 2026.
The Bank of Canada did as expected and raised its key overnight interest rate by another 0.5% to 1.5%. The rate hike lifted the Canadian dollar up to US$0.7909.
Toronto Stock Exchange (TSX) announced the launch of the S&P/TSX Battery Metals Index. The new index measures the performance of TSX and TSX Venture Exchange listed companies that are focused on the production and exploration of select metals that enhance the decarbonisation of the transportation sector.
OPEC agreed to up its crude production by another 250,000bbls/day to 650,000bbls/day.
The way I see it – When I was in the brokerage business we often said that – “A market that won’t go down on negative news is probably going to go up.” The same could be said for today’s crude oil market as despite OPEC’s above mentioned increase in production, which should have forced crude prices lower – the price of crude oil rose by $2.24 to US$117.49.
The closely watched Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs was unchanged at 727, an increase of 271 from this time last year. Up north – the number of active Canadian rigs increased by 14 to 117 for an increase of 40 over one year ago.
For the Week – The DJI fell by 0.94% to 32,900 as the S&P 500 dropped 1.18% to 4,109 and the NASDAQ lost 0.97% to 12,013. Across the line – the TSX gained 0.20% to 20,791 while the TSX Venture lost 0.55% to 720.
Gold bullion lost 0.38% to US$1,850, and silver fell by 0.95% to US$21.91 while copper improved by 3.47% to US$4.47. Elsewhere – crude oil Â gained 4.52% to a 3-month high of US$120.40 Â while natural gas lost 2.18% to US$8.54. The Canadian dollar was up by 1.00% to US$0.7940. Overall – the CRB Commodities Index gained 1.47% to a new 11-year high of 344.
And Finally – The Covid-19 pandemic may have forever changed office schedules, as according to office analytical firm Basking.io – nearly half of all North American office workers report to their office workplace only once-a-week – well up from the 21% who reported only once-a-week pre-pandemic.
Good luck in the week ahead….