Housing Starts Decline Drag U.S. Indexes, Dollar Lower

Bikram Pandey
19 Jan, 2011
New York City

U.S. indexes dropped sharply after latest housing data suggested weak and uneven recovery. Goldman Sachs earnings dropped 53% and American Express cut back office staff. Asian markets rose as exporters gained on Apple sales and earnings.

[R]4:10 PM New York – U.S. indexes dropped sharply after latest housing data suggested weak and uneven recovery. Goldman Sachs earnings dropped 53% and American Express cut back office staff. Asian markets rose as exporters gained on Apple sales and earnings.[/R]

U.S. indexes traded lower after housing starts declined, China inflation worries resurfaced and American Express cut staff. A sharp decline in earnings at Goldman Sachs also weighed on market sentiment. The dollar edged lower for the second day against the euro and the pound.

Goldman Sachs reported 10% decline in revenues and net dropped 53% to $2.4 billion or $3.79 a share. Fairholme sold its stake in General Growth to Brookfield for $1.7 billion. Fluor awarded $3.5 billion contract by Santos. Apple profit surged 78%. Northern Trust and State Street Corp quarterly net declined.

Apple first quarter net sales surged 71% on record holiday sales. Amgen signed an agreement to sell California facility to Boehringer Ingelheim. IBM fourth quarter total revenue increased 6.6%. Goldman Sachs fourth quarter net revenues fell 10% and net plunged 51%.

The European indexes edged lower after euro-zone current account deficit widened and construction output fell in November. Germany lifted growth forecast for 2011. Spain home sales plunged in November and Poland raised key interest rate.

The UK indexes dropped after jobless claims fell in December. Irish Prime minister survived vote of confidence. Irish home price index declined in the fourth quarter. The FSA imposed fines of £7.7 million on Barclays. Pearson soared 5.7% after the company estimated 16% increase in 2010 earnings.

The Nikkei closed higher for the third day in a row led by exporters. Machine tool exports surges 170% as China leads the demand. Mitsubishi Heavy Industry secures an order worth more than 10 billion yen for supply of gas power plant to a U.S electric utility.

Shanghai and Hong Kong stocks gained more than 1%. President Hu Jintao began his four-day U.S. as traded and defense top the agenda. China cuts its U.S treasury holdings to 895.6 billion in November.

Sensex index in Mumbai ended below 19,000 as stocks in technology, oil and gas sectors declined. HCL Technologies reported third quarter profit increased 34.2%. Gail Ltd plans to raise $800 million or 50% of its 2011 capex through a public issue.

Stocks in Sydney rebounded to a nine-month high led by miners and banks. The Australia dollar trades higher. Woolworth and Wesfarmers are the two Australian retailers in the top global 250 retailers. Singapore Stock Exchange says it is on track to merge with ASX.

Commodities, Currencies and Yields

Dollar declined against euro to $1.346 and fell against the Japanese yen to 82.08. One UK pound fetched $1.598.

Crude oil decreased $0.57 to $90.81 a barrel for a front month contract, natural gas edged higher 0.14 cents to $4.56 per mBtu and gasoline increased 0.07 cents to 247.99 cents.

Gold closed unchanged in New York trading to close at $1,368.20 per ounce, silver decreased $0.22 to $28.69 per ounce and copper for the front month delivery decreased 7.35 cents to $4.35 per pound.

Yield on 10-year U.S. bond decreased to 3.33% and on 30-year U.S. bond yield dropped to 4.52%.