While you were sleeping: US new home sales rise, durable goods miss estimates

Thursday 27th August 2009

Sales of new homes in the U.S. rose more than expected to the highest in 10 months and durable goods orders surged, adding to signs the world’s largest economy may be emerging from recession.

Sales of new single-family homes rose 9.6% in July from June to an annual pace of 433,000, according to the Commerce Department.

The monthly series hasn’t jumped that much since February 2005. Separate figures showed durable goods orders rose 4.9% last month, led by a demand for aircraft. Excluding transportation items, however, durable goods posted a lower-than-expected 0.8% gain.

A survey by AAA auto and travel group showed Americans plan to spend less on travel during the Labor Day holiday as the recession spurs more families to stay at home. The number of people planning to travel by road or plane during the break fell 13.3% to 39.1 million, the survey showed.

Stocks were mixed on Wall Street. Home Depot, the home improvement chain, rose 0.9% to US$27.57 after the home sales data and D.R. Horton Inc. gained 5.7% to US$13.79, leading gains in homebuilders on the Standard & Poor’s 500.

Among manufacturers, 3M Co. fell 1.73% to US$71.47, the largest decline on the Dow lower, General Electric fell 1.33% to US$14.11 and Caterpillar Inc. declined 1.33% to US$47.25 after durable goods disappointed and China said it is considering ways to reduce overcapacity in industries such as steel and cement to cool investment growth.

The Dow Jones Industrial Average rose 0.04% to 9543.52 and the S&P 500 gained/declined 0.01% to 1028.12. The Nasdaq Composite also rose 0.01% to 2024.43. Shares weakened in Europe as a decline in crude oil weighed on energy companies and some investors took advantage of equities’ rally since March to trim their holdings.

The Dow Jones Stoxx 600 Index fell 0.6% to 236.45. Among regional benchmarks, the U.K.’s FTSE 100 slipped 0.5% to 4890.58 and France’s CAC 40 declined 0.3% to 3668.34. Germany’s DAX 30 fell 0.6% to 5521.97, even after Germany’s Ifo business climate index rose to 90.5 this month from 87.4 in July.

Swiss Life, Switzerland’s largest life insurer, dropped 7%, leading the Stoxx 600 lower, after posting a 91% slump in first-half profit. Natixis SA surged 39% after the French lender said its parent company will guarantee US$50 billion of assets. China’s State Council yesterday said it is looking at ways to restrict industry over-capacity, including increased control of stock and bond sales by companies in targeted industries, such as coal and energy.

The U.S. dollar and the yen gained against the euro on concern moves by China to rein in capacity will reduce investors’ appetite for risk.

The smaller-than-expected gain in U.S. durable goods orders also helped lift the greenback. The greenback rose to $1.4249 against the euro from $1.4296 and the yen strengthened to 134.19 per euro from 134.65. The US dollar traded at 94.15 yen from 94.18.

U.S. crude for October delivery fell about 1% to US$71.34 a barrel on the New York Mercantile Exchange after U.S. Energy Information Administration figures showed stockpiles in America unexpectedly rose by 200,000 barrels last week as imports rose.

Analysts had been predicting a 1.1 million barrel decline. Gold fell as a stronger greenback trimmed demand for the precious metal as an alternative investment. Gold futures for December delivery slipped 0.1% to US$945.10 an ounce in New York. U.S. Treasuries were little changed after the U.S. sold US$39 billion of five-year debt in the second of three sales this week aimed at raising US$109 billion.

The notes drew a yield of 2.494%, close to the 2.509% forecast in a Bloomberg survey. Indirect bidders, which include foreign central banks, bought 56.4% of the notes on offer at the sale, up from 36.7% in July.

The yield on existing five-year notes was little changed at 2.46% and the benchmark 10-year Treasuries held at 3.44%. The yield on 30-year Treasuries fell 3 basis points to 4.20%.

Businesswire.co.nz

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