‘That’s a Wrap’
By Rod Blake
As the brokers, investors, portfolio managers and traders reviewed the previous week’s market action, it was clear that the American big boards of Dow 30, S&P 500 and NASDAQ were following the 4th-quarter script higher while the resource weighted TSX composite and worse yet, the junior TSX Venture went negative.
The way I see it – Although it was disappointing to see the Venture Exchange down by almost 3% last week, I took it with a seasonal grain of salt. By seasonal I mean tax loss selling season that affects the Venture Exchange much more than the senior boards. Here’s why – investors sell stocks for a loss at year-end to offset gains they have made in other stocks or assets such as real estate etc. This tax loss selling puts noticeably more pressure on the Venture than the senior exchanges because many listings on the TSX venture are thinly traded. That is, they don’t trade in large volumes, especially in years like 2023 when interest in junior companies was almost nonexistent and the index is at multi-year lows. Plus, experienced brokers and investors know that this selling is coming so they pull back their bids on target stocks and wait for the sellers to push the share price down to them. Tax loss selling puts a exaggerated seasonal downtick on the Venture Exchange, which usually ends with a sharp rally in the New Year. So, while a year-end seasonal low in the Venture Exchange is disappointing – for shrewd investors – it may well present a very good buying opportunity.
Last week’s market gains spilled over into the new week, save for the TSX Venture that continued to receive relentless selling pressure.
E-One Moli Energy announced the Taiwan based company will build a new $1.05-billion lithium-ion battery plant in Maple Ridge, BC.
This as the price of Lithium fell to a new 2-year low of US$19,745 a tonne.
The continued low price of lithium carbonate helped to drag the price of lithium giant Albemarle Corporation ‘ALB-N’ stock down to another new 3-year closing low of US$114.19.
Also with clean energy – Amazon.com, Inc. ‘AMZN-N’ announced the giant American company will build its first Canadian wind farm in Vulcan County, Alberta. The 495-megawatt capacity facility, to be constructed about 130 kilometres south of Calgary, will produce enough power to run about 240,000 homes.
Parkland Corporation ‘PKI-T’ said the Calgary, AB based fuel company had secured a $210-million Canada Infrastructure Bank (CIB) financing that will facilitate the building of up to 2,000 electric vehicle (EV) public fast charging stations across Canada.
After months of negotiations –Teck Resources Ltd. ‘TECK.B-T’ & ‘TECK-N’ announced the Vancouver, BC based senior miner had agreed to sell its steelmaking coal arm, Elk Valley Resources (EVR), to Switzerland’s Glencore plc ‘GLEN-L’ and partners in an all-cash deal valued at some US$9-billion.
The price of Northern Dynasty Minerals Ltd. ‘NDM-T’ & ‘NAK-N’ shares’ rallied by $0.05 or 10.20% to $0.54 after the Vancouver, BC based mineral developer received an initial $2-million royalty advancement payment intended to help advance the company’s Pepple copper/gold project in southern Alaska.
Skeena Resources Ltd. ‘SKE-T&N’ shares’ rose by $0.06 or 1.20% to $5.06 after the Vancouver, BC based mineral developer released a positive Definitive Feasibility Study for the company’s Eskay Creek Gold-Silver Project in the Golden Triangle area of northwest British Columbia.
This as the price of silver rose to a new 21/2-month high of US$23.76 a troy ounce.
Birchcliff Energy Ltd. ‘BIR-T’ stock dropped by $0.45 or 6.02% to 7.03 after the Calgary, AB based oil & natural gas company’s 3rd-quarter report failed to meet investor expectations.
This as the price of natural gas fell to a new 2-month low of US$2.96 per million British thermal units (MMBtu), while crude oil fell to a new 4-month low of US$72.90 per barrel (Bbl).
The influential Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs rose by 2-rigs over the past week to 618, down by 164 rigs from this time last year. In Canada – the number of active rigs fell by 3-rigs to 196, down by 5-rigs from a year ago.
The price of lumber rose to a new 4-month high of US$538 for 1,000 board feet (MBFT).
Uranium equities continued to lead the resource markets with Fission Uranium Corp. ‘FCU-T’ rising to a new 11/2-year closing high of $1.02, while NexGen Energy Ltd. ‘NXE-T&N’ and Cameco Corp. ‘CCO-T’ & ‘CCJ-N’ rose to respective new all-time closing highs of $8.74 and $61.19.
Silver and lumber were the commodities that had the best weekly gains, while lithium and natural gas were the largest drags.
All of the major North American markets showed gains at the end of the week, with the TSX Venture Exchange doing a complete turn about and outperformed its more senior siblings.
For the Week – the DJI gained 1.94% to 34,947 with the S&P 500 up 2.24% to 4,514 and the NASDAQ ahead by 2.37% to 14,125. In Canada – the TSX gained 2.66% to 20,176 and the TSX Venture rose 4.12% to 531. The CBOE Volatility Index or VIX fell 2.61% to 13.80.
With currencies – the Canadian dollar gained 0.59% to US$0.7288 while the U.S. dollar ‘DXY’ dropped 1.88% to 103.80.
With commodities – gold bullion gained 2.17% to US$1,980, as silver rose 6.65% to US$23.72, and copper gained 4.18% to US$3.74, while lithium lost 4.78% to US$19,745. Crude oil lost 1.66% to US$75.89 and natural gas dropped 1.99% to US$2.96, while uranium gained 0.48% to US$74.00. With soft commodities – lumber gained 4.67% to US$538. Overall – the CRB Commodities Index rose by 0.32% to 311.
On Last Thought – In the short term the market is a voting machine while in the long run it is a weighing machine. Short term stock prices are influenced by a multitude of factors such as interest rates, inflation, and political events. But in the longer term it is the company’s performance that will determine its true value.