While you were sleeping: US manufacturing, home sales rise, Ford posts profit

Tuesday 3rd November 2009

US manufacturing grew faster than expected last month and pending home sales rose helping stoke optimism the US economic recovery won’t falter as the government ponders the withdrawal of stimulus measures.

The Institute for Supply Management’s factory index rose to 55.7 from 52.6 in September.

Figures from the National Association of Realtors showed contracts to buy previously owned homes gained for an eighth straight month, suggesting some Americans were rushing to buy to qualify for the first-home buyers US$8,000 tax credit before it ends on November 30.

Pending home sales rose 6.1%, based on the association’s index and are a fifth higher than in the same month of 2008.

Construction spending climbed 0.8% in September, driven by a surge in homebuilding, according to the Commerce Department.

Stocks on Wall Street reversed earlier gains, after Jon Greenlee, a Federal Reserve official for regulating lenders, said the banking system is “far from robust” and are at risk from defaults on commercial Stocks on the tech-laden Nasdaq Composite declined after Citigroup cut its rating on Research In Motion to ‘sell’ from ‘buy,’ sending shares of the BlackBerry maker down 7.2% to US$59.24.

The Dow Jones Industrial Average rose 0.4% to 9754.60 and the Standard & Poor’s 500 gained 0.1% to 1037.52. The Nasdaq declined 0.2% to 2040.17.

Bank of America declined 0.3% to US$14.56, Wells Fargo shed 0.8% to US$27.30 and Goldman Sachs Group dropped 0.8% to US$168.74.

CIT Group Inc. plunged 63% to US$0.26 after the commercial lender filed for bankruptcy protection.

Ford Motor Co., which managed to avoid bankruptcy that subsumed rivals General Motors and Chrysler, posted third-quarter profit of US$997 million after trimming discounts on vehicles and lifting sales.

Chief Executive Officer Alan Mulally said the automaker expects to be “solidly profitable” in 2011.

Shares of Ford climbed 6.6% to US$7.46.

The dollar and yen weakened as the stronger US manufacturing and housing stoked investors’ appetite for riskier, or higher-yielding assets in other currencies such as the Australian dollar. The Reserve Bank of Australia is forecast to lift its benchmark interest rate to 3.5%.

The dollar fell to US$1.4745 per euro from US$1.4719. The euro traded at 133.14 from 132.61. The dollar rose to 90.31 yen from 90.09.

Stocks rose in Europe after the US manufacturing data and figures yesterday showing the stronger Chinese manufacturing growth in 18 months bolstered optimism for global growth and demand. The Dow Jones Stoxx 600 climbed 0.3% to 237.64.

Rio Tinto climbed 4.5% and Kazakhstan’s largest copper producer, Kazakhmys, jumped 4.5% as the price of copper gained.

Royal Bank of Scotland tumbled 7.8% amid speculation the European Union will force the lender to sell more-than-expected assets.

Lloyds Banking Group fell 2.3%. Allied Irish Banks tumbled 11%.

Crude oil gained after the US and Chinese manufacturing data.

US crude edged up 96 US cents to US$77.96 a barrel on the New York Mercantile Exchange.

Copper for December delivery was little changed at US$2.955 a pound in New York. Gold futures for December delivery climbed 1.8% to US$1,059.50 an ounce.

Businesswire.co.nz

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