World Markets Falter; U.S. Home Prices Struggle at Lows

Devan Biswas
26 Oct, 2010
New York City

U.S. indexes decline after home prices in cities increased at a slower pace. The persistent weakness in home prices and uncertainties in the foreclosure process keep buyers on the sidelines. European markets closed lower as earnings outlook deteriorate and government and consumers tighten spending.

[R]4:00 PM New York – U.S. indexes traded lower after home prices in cities increased at a slower pace. The persistent weakness in home prices and uncertainties in the foreclosure process has kept buyers on the sidelines. European markets closed lower as earnings outlook deteriorate and government and consumers tighten spending.[/R]

U.S. stocks struggled after rising to a 6-month high yesterday as home prices increase less than expected in August. The index tracking metropolitan home prices increased 1.7% but home prices are below 25% from the peak three years ago. U.S. consumer confidence index increased in October from the seven-month low but expectations of jobseekers are at the low for the year and income expectations are at six-month low.

Warren Buffett appoints investment manager to run a significant portion of investment portfolio of Berkshire Hathaway Inc. Texas Instruments earnings soared 60% and Ford net surged 70%. Walgreen Co is looking to sell its pharmacy benefit division.

Royal Caribbean Cruises Ltd surged after it lifted 2011 estimate. Capella Education Co declined after it estimated slower enrollment growth. Coach Inc soared on higher earnings. Cummins Inc declined after earnings were lower than expected.

The European indexes declined after UBS reported a loss in its investment banking division and on a weaker outlook from Vestas Systems and ArcelorMittal. German import price inflation rose in September and French consumer confidence improved. Sweden’s Riksbank raised key rate to 1%.

The UK indexes edged lower after GDP expanded 0.8% in the third quarter and services index rose 2.7% in August. S&P raised the UK rating outlook to stable as government cut spending and reduce deficit in the next four years. Apollo and CVC Capital agreed to buy Brit Insurance for up to £888 million.

Tokyo stocks closed lower as the yen hovered near recent highs and the dollar resumed its slide. Stocks of utilities gained but brokers and financials edged lower. Japan approves 4.42 trillion yen of supplementary budget allocation. India and Japan agree to cut tariff on most items and carry out a joint exploration of rare earths.

Stocks in China region dropped after China raised fuel prices at midnight by 3%. Average new home price in Shanghai stays above 20,000 yuan per square meter for the fifth week in a row but unit sales decline.

Stocks in Mumbai trading declined tracking losses in Asian markets. Birla Corporation Limited declined after quarterly net plunged 54%. Dena Bank surged after second quarter net soared 29%. Idea Cellular Limited net declined 18%. Procter & Gamble declined after quarterly net fell 39%.

Stocks in Mumbai dropped in a choppy session tracking losses in Asia. Coal India IPO price was set at Rs 245 a share, at the upper end of its filing range and raise $3.5 billion for India. Gujarat government plans the world’s first ever dam across the sea at the cost of $11 billion.

Commodities, Currencies and Yields

Dollar edged up against euro to $1.383 and gained against the Japanese yen to 81.57. One UK pound fetched $1.582.

Crude oil increased $0.06 to $82.58 a barrel for a front month contract, natural gas edged higher 0.029 cent to $3.34 per mBtu and gasoline increased 1.36 cents to 209.09 cents.

Gold decreased $0.10 in New York trading to close at $1,338.80 per ounce, silver added $0.22 to $23.77 per ounce and copper for the front month delivery increased 1.00 cents to $3.87 per pound.

Yield on 10-year U.S. bond increased to 2.63% and on 30-year U.S. bond yield increased to 3.99%.