By Our Man in Oz
Minews. Good morning Australia, how did your market start the New Year and more importantly how will it continue?
Oz. The start was better than most people expected and if the Aussie dollar keeps falling, the outlook could also be brighter than was expected a few weeks ago.
Minews. Tell more.
Oz. Iron ore stocks, which have been hammered flat by the falling price of their commodity staged a remarkable rebound on the first trading day of the year with goldminers not far behind.
In the case of iron ore, which saw spectacular rises such as a 39 per cent increase by Atlas Iron (AGO) on Friday alone, the cause was a combination of a recovery in the iron ore price, aided by a fresh fall in the local dollar, and exaggerated percentage gains by stocks rising from depressed prices.
In the case of gold, which doubles as a commodity and currency, the solid rises by stock such as Northern Star (NST), Regis (RRL) and Medusa (MML) was all about currency.
Minews. We’ll get to prices later but for now a snapshot of last week and its short trading hours, followed by a spot of crystal ball gazing for the rest of 2015.
Oz. Over the short week between Christmas and last Friday the Australian market, as measured by the all ordinaries index, rose by a modest 0.8 per cent. The metals and mining index did better with a rise of 3.1 per cent, and gold did best of all, adding an impressive 7 per cent.
In terms of the full 2014, the gold index and the all ordinaries barely moved, up by less than 1 per cent each. The metals and mining index dropped by 21 per cent, and might have fallen further if not for the 9 per cent decline in the Australian dollar against its U.S. cousin.
The outlook for 2015 is surprisingly optimistic. Not so much because of a sudden recovery in commodity prices, which remains weighed down by excess production and sluggish global growth, more because of the currency effect with the Aussie dollar expected to continue falling thanks to a combination of deteriorating terms of trade and an emerging political crisis as conservative governments around the country stumble and the socialist alternative looks less bad.
Minews. That sounds like a go nowhere year.
Oz. You could say that, though it could also be described as stock pickers year because there will probably be an even spread of good and not-so-good performers in the equity space. The trick will be to back the winners and dodge the losers.
At this stage it is the iron ore stock staging a recovery and gold stocks feeling the benefit of digging up a currency which is looking strong compared with the weakening Australian dollar.
Minews. Time now for a look at last week’s prices, starting with iron ore, please.
Oz. That’s a good kick-off point because some of the rises were in the eye-catching category even though they are from a low base.
Atlas, mentioned earlier, was a star with its 39 per cent rise on Friday, but over the course of the week it actually shot up by 64 per cent as it stacked on A9 cents to close at A23 cents – an impressive performance but one which needs to be set against the $1.19 it reached early in 2014.
BC Iron (BCI) was another iron ore producer in recovery mode, rising last week by A16.5 cents (36 per cent) to A62 cents though, like Atlas, that’s still a long way from last year’s peak of A$5.50.
Other iron ore moves last week included Fortescue (FMG), up A29 cents to A$2.83. Mt Gibson (MGX), up A4 cents to A28 cents, and Sundance (SDL), up A0.6 of a cent to A2.5 cents.
Minews. Gold next please starting with the three stocks mentioned earlier.
Oz. Northern Star added A12 cents to A$1.51. Regis rose by A24 cents to A$1.94, and Medusa gained A8.5 cents to A71 cents. Other gold moves included: Evolution (EVN), up A4 cents to A65.5 cents. Kingsrose (KRM), up A3 cents to A26 cents. Troy (TRY), up A9 cents to A48 cents, and Silver Lake (SLR), up A4 cents to A19.5 cents.
Minews. The base metals next please starting with copper.
Oz. CuDeco (CDU) was the copper star last week, adding A60 cents (44 per cent) to A$1.95 after reporting spectacular drill hits of up to 44 per cent copper during grade control drilling at its Rocklands project in Queensland. It ended the week in suspension pending a fresh announcement.
Other copper moves included: Tiger (TGS), up A4 cents to A15.5 cents. Sandfire (SFR) up A16 cents to A$4.65. OZ (OZL), also up A16 cents to A$3.54, and Altona (AOH), up A2 cents to A23.5 cents.
Panoramic (PAN) was the best of the nickel stocks, up A4.5 cents to A43.5 cents. Sirius (SIR) gained A9 cents to A$2.58, and Western Areas (WSA) put on A8 cents to A$3.87.
Red River (RVR) did best among the zinc stocks with a rise of A3.2 cents to A13 cents. Terramin (TZN) added A1.5 cents to A11 cents, and Mungana (MUX) gained A2 cents to A12.5 cents.
Minews. Uranium, coal and graphite next, please.
Oz. Uranium stocks firmed, as did a few coal stocks, while graphite stocks were quite strong.
Paladin (PDN) was the best of the uranium sector, rising by A3.5 cents to A37 cents. Berkeley (BKY) wasn’t far behind with an increase of A2.5 cents to A26.5 cents.
New Hope (NHC) was the top coal stock, adding A9 cents to A$2.58 while sector leader Whitehaven (WHC) lost A3 cents to A$1.45.
Bora Bora (BBR) led the graphite stocks with a rise of A3 cents to A20.5 cents. Magnis (MGS) added A2.5 cents to A22.5 cents, and Syrah (SYR) was up by A17 cents to A$3.19.
Minews. The minor metals to close, thanks.
Oz. It was a quiet week for all of the minor metals. Base (BSE) led the titanium stocks with a fall of A1 cent to A19 cents. Wolf (WLF) was the best of the tungsten and tin stocks with a rise of A1 cent to A26.5 cents.
Rare earth stocks gained a little ground. Lynas (LYC) was up by A1.2 cents to A7.2 cents, and Alkane (ALK) put on A2.5 cents to A23 cents.
Minews. Thanks Oz, and Happy New Year.