- Posted July 12, 2012 by
3 Commodity stocks moving on news
Obviously the market did not like the Fed minutes yesterday and that was obvious in the price action. One thing investors should be aware of is that both Brazil and South Korea lowered their interest rates yesterday which could signal a new round of global easing. This would most certainly be bullish for commodities and commodity investors, so we will be on the lookout for other central banks lowering rates or even dare we say QE3.
Oil & Natural Gas - Chesapeake Energy (CHK) finished up yesterday by $0.39 (2.09%) to close at $19.08/share. Volume was respectable at 18 million shares traded, so investors had little to complain about. We do want to say that we are getting a bit concerned about the contract disputes which keep arising and have made the headlines recently. When you roll up as much land in as many different places as Chesapeake did there are bound to be issues, but it becomes ever more obvious by the event that the company was playing fast and loose during the boom. Thankfully those days are over and investors can now watch the assets be developed, if everything goes according to plan - which we suspect it will.
If one is going to talk about iron ore and the economy, then copper cannot be left out of the conversation. Freeport-McMoRan (FCX) has been falling recently and giving back the gains from the rallies experienced when investors thought Europe's policy makers had turned a corner. The corner was not turned and Freeport shares have turned lower. Yesterday we saw shares break the $33/share level as they closed at $32.36/share after losing $0.73 (2.21%) on the session. Volume does remain strong with 23.8 million shares traded yesterday.
Goldcorp (GG) did not do itself any favors with the recent announcement of the mine issues. Shares dropped $3.58 (9.74%) yesterday to finish at $33.17/share on heavy volume of 15.3 million shares. That is a little under three times the company's three month average daily volume traded. Production setbacks are typical in the mining industry, and usually investors would look at it and accept it however in this case the two mines in question are the company's key assets so it is indeed quite serious. If the problems were at one mine it might be alright, but both mines makes one wonder if it is an execution issue.
Disclosure: I'm strongly reccomend not to invest in commodity stocks within next 72 hours.
By Personal Financial and Investment Consultant Irakli Berdzenadze