US stocks climb, Feb. 29-March 4

U.S. indexes rose on the back of higher commodity prices and a better-than-expected jobs report. The Dow Jones Industrial Average gained 2.2% to close at 17,006.77. The S&P 500 Index advanced 2.7% to 4,717.02. The Nasdaq Composite Index climbed 2.8% to 4,717.02. Spot gold added 3.6% to finish at US$1,266.20 per oz. The April contract for crude oil surged 9.6% to US$35.92 per barrel.

The U.S. economy added 242,000 jobs in February, mainly in the healthcare, retail and construction sectors, beating the average 195,000 job gain analysts had expected. However, job losses in the mining sector continued. The sector shed 18,000 jobs in February, after losing 9,000 positions in January. The unemployment rate for February stayed at 4.9%.

Vale was the week’s percentage winner, soaring 62% to US$4.38 per share. Samarco and its owners Vale and BHP Billiton agreed to pay at least US$1.1 billion for the next three years for damages caused by the Samarco dam failure in Brazil that killed 19 people last November. Under the agreement, the three companies will establish a foundation to cover damages for the next 15 years. From 2019 to 2021, Samarco will pay between US$210 million and US$420 million for remediation and compensation projects, with amounts for the remaining years to be decided. Both Vale and BHP will be responsible for any costs Samarco cannot cover. Vale cautions the agreement does not cover lawsuits or criminal investigation.

Diversified miners Hudbay Minerals and Teck Resources had a strong week after a rally in base metal prices. Hudbay surged 48% to US$4.15 per share and Teck jumped 36% to US$7.71 per share. Haywood Securities notes copper gained 6.4%, while nickel added 9.1%, lead jumped 6.8% and zinc moved up 5.2%.

Rio Tinto shares tacked on US$4.80 to close at US$30.32, after the company made several announcements. On March 1, Rio sold its 40% interest in the Bengalla coal joint venture in Australia to New Hope Corp. for US$616.7 million. Since 2013, Rio has announced or completed US$4.7 billion of divestments. Total coal reserves grew to 2.5 billion tonnes, while resources, exclusive of reserves, increased to 6.8 billion tonnes.


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