Last week’s picture of doom and gloom was forgotten in today’s trading as resource stocks staged its second comeback for the week, underpinned by good news factors that seem determined to shake off any market sluggishness - at least for today.
Rio announced it had raised $A49 billion in an oversubscribed, syndicated loan package for its acquisition of Alcan, with Reuters reporting bookrunners for the loan were Royal Bank of Scotland, Deutsche Bank, Credit Suisse and Societe General.
“We are happy with the oversubscription,” Rio spokesman Nick Cobban told the newswire but declined to comment further.
Rio made a friendly bid for Canada-based Alcan in July, trumping Alcoa’s offer which had tried for the past two years to merge with the company.
The raising saw the mining major’s share price rally $5.57 (6.5%) to close at $91, but analysts and traders say the rise may be overdone for the short term, with expectations that the loan would go ahead anyway.
Meanwhile rival BHP Billiton also matched up to Rio’s rally, climbing $2.30 (6.5%) to $37.70, boosted by its full-year financial report which came out just minutes before market close yesterday.
The company reported its fourth consecutive record annual results of $US13.4 billion ($A16.8 billion) on the back of annual production records for a suite of commodities.
The positive result for the mining giant and its buoyant outlook for commodities paved the way for resource stocks to have a bumper day, compounded by firmer base and precious metals, and a market belief that the US Federal Reserve could cut rates.
Fortescue Metals Group more than made up for lost ground today, following yesterday’s slight slump after Russia’s biggest steel player MMK took a 5.37% stake.
Shares in the iron ore hopeful climbed $2.90 (9.8%) to $32.40.
“When the end customers are buying, it’s the greatest insider sign of where the iron ore price is going for the next couple of years. I’d be buying Rio and BHP on the back of that,” a senior institutional trader told Dow Jones Newswires.
Not to be exempt from the gains made by the big two, other iron ore plays enjoyed the walk further into green territory, with Territory Resources up 17.5c (24.5%) to 89c as its Frances Creek project ramps up, Cape Lambert added 7.5c (17.2%) to 51c and Australasian Resources firmed 13c (10.8%) to $1.33.
Nickel plays were not left out, with the metal climbing a further 3.5% in its spot and three-month delivery price on the London Metal Exchange overnight.
Australian Mines topped the list for highest nickel movers, added 2.3c (26.4%) to 11c, GME Resources climbed 7.5c (13.9%) to 61.5c and Minara Resources gained 63c (10.7%) to $6.51.
It was good news all round for Summit Resources which has amicably settled its proceedings against Newland Resources over the Georgina Basin farm-in and joint venture heads of agreement.
Summit continued with the good vibes theme and dropped proceedings against its former managing director Alan Eggers in relation to the agreement.
Shares in Summit firmed 13c (4.6%) to $2.95, while its major stakeholder Paladin Resources climbed 42c (6.9%) to $6.49.
While Newland may be breathing a sigh of relief, the good news did nothing to boost its share price, which closed unchanged at 15c.
