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King Coal bounces back
Starting Monday, listed coal stocks in most global regions rallied powerfully, leading the global resources sector upwards.

Author: Barry Sergeant
Posted: Tuesday , 14 Oct 2008

JOHANNESBURG -



Led by US coal giants such as Peabody Energy, which rose 19% on the day, listed coal stocks staged a powerfully rally on Monday, which spread across into brisk Australian trade on Tuesday, with Rocklands Richfield leading the pack in that country, percentage wise, to rise by 35% on the day. The rally was largely ignored in the Asian region, however, where some of the world's biggest coal miners, such as Shenhua, are found, but was picked up again in South Africa, where Coal of Africa, as a sampling, rose by 24%.

The rally was inspired, of course, by cheerful news that global credit markets had a good chance of being freed up, triggering an 11% rise on Monday for the Dow Jones Industrial Average. The US administration said it would invest some USD 125bn in nine private sector banks, while France, Germany, Spain, the Netherlands and Austria were expected to commit USD 1.8 trillion to guarantee bank loans and purchase stakes in lenders.

On Tuesday, commodity prices of all kinds were rallying strongly, in line with the recovery in stock markets, but, when measured from highs, most prices remain depressed and in the doldrums, well below record highs, mostly seen within the past 12 months.