While you were sleeping: US consumer confidence sinks, oil falls

Wednesday 29th July 2009

US consumer confidence fell more than expected this month as a rising jobless rate dimmed Americans’ propensity to spend. Oil and stocks fell while the US dollar strengthened after the data stoked the greenback’s safe haven appeal.

The Conference Board’s confidence index fell to 46.6 from 49.3 in June. Economists had expected a dip to 49.

The US economy has shed 6.5 million jobs since the recession began in December 2007, driving the unemployment rate up to 9.5%, the highest in almost three decades, last month. The jobless rate is forecast to reach 10%.

A gauge of US house prices rose for the first time in three years in May, stoking optimism the housing slump is easing. The S&P/Case-Shiller home-price index rose 0.5% from April.

Crude oil fell after the consumer confidence figures stirred concern demand for fuel in the US may be weaker.

Brent crude declined US$2.04 to US$68.77 a barrel, while US crude dropped US$1.15 at US$67.23. Oil prices will average $73 a barrel next year, up from an average 2009 price prediction of $58.23 a barrel, according to a Reuters survey.

The euro weakened 0.6% to $1.4162 and declined 1.3% to 133.86 against the yen. The greenback slipped 0.7% to 94.52 yen.

Stocks on Wall Street fell as consumer confidence missed estimates and companies including Office Depot reported weaker-than-expected earnings.

The Dow Jones Industrial Average declined 0.1% to 9,096.72 and the Standard & Poor’s 500 fell 0.3% to 979.62, slipping from an eight-month high. The Nasdaq Composite gained 0.4% to 1,975.51.

Pfizer Inc. fell 3.6% to US$16.03, leading the Dow lower, after the US National Institutes of Health said it halted a trial of the drug sildenafil, saying it caused medical problems in sickle cell patients. The trial was assessing the effectiveness of sildenafil, sold by Pfizer under the Viagra brand, for pulmonary hypertension in patients with sickle cell disease, Reuters reported.

Merck declined 2.4% to US$30.02. American Express dropped 2.5% to US$27.68.

Exxon Mobil fell 1.2% to US$71.89 as crude oil declined.

Office Depot Inc. dropped 18% to US$4.38 after the company reported a second-quarter loss that was almost twice as large as expected. Coach Inc. fell 1.3% to US$28.05 after the retailer reported a 0.5% decline in fiscal fourth-quarter sales.

Valero Energy Corp., the biggest US refiner, fell 2.4% to US$18.32 after posting a second-quarter loss on falling demand for fuel and plant shutdowns.

IBM, the world’s biggest computer-services provider, fell 0.3% to US$117.28 after announcing it would acquire analytics software developer SPSS Inc. for about US$1.2 billion.

Sprint Nextel Corp. rose 0.9% to US$4.59 after saying it will buy Virgin Mobile USA Inc. for US$483 million.

US Steel Corp. fell 2.2% to US$40.35 after posting a second-quarter loss of US$392 million as a slump in demand for steel pared revenue by 75%. It predicted a further loss in the third quarter.

US Treasuries fell after the consumer confidence data. The yield on 10-year debt fell 4 basis points to 3.69% and the yield on 30-year Treasuries slid seven basis points to 4.56%.

Two-year notes weakened, driving the yield up five basis points to 1.088% after the government sold a record US$42 billion of the two-year notes, drawing a higher-than-expected yield of 1.08%

Gold fell as the greenback climbed, sapping demand for the previous metal as an alternative investment.

Gold futures for August delivery declined 1.5% to US$941.70 an ounce on the New York Mercantile Exchange.

The US and China “touched upon” the exchange rate between the yuan and the greenback and discussed climate change during the first round of what will be an annual "Strategic and Economic Dialogue." They signed a memorandum to increase cooperation on tackling climate change

In Europe, the Dow Jones Stoxx 600 fell 0.9% to 218.54. Deutsche Bank tumbled 11% after saying provisions for problem loans jumped to 1 billion euros last quarter. The Frankfurt-based lender posted a 68% gain in earnings to 1.1 billion euros.

The UK’s FTSE 100 declined 1.3% to 4,528.84, Germany’s DAX 30 fell 1.5% to 5,174.74 and France’s CAC 40 shed 1.2% to 3,330.97.

Businesswire.co.nz

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