World Markets Rest; U.S. Home Sales Struggle

Bikram Pandey
26 Feb, 2012
New York City

U.S. stocks advanced in the week after investors focused on domestic earnings and worries in the euro zone subsided for now. U.S. new home sales in January fell 0.9% and 2011 sales were the fewest since record keeping began five decades ago.

[R]10:10 AM New York – U.S. stocks advanced in the week after investors focused on domestic earnings and worries in the euro zone subsided for now. U.S. new home sales in January fell 0.9% and 2011 sales were the fewest since record keeping began five decades ago.[/R]

U.S. indexes climbed and the S&P 500 index traded at a high last seen in 2008 after new home sales were ahead of expectations and consumer confidence rose to a one-year high.

For the week, the S&P 500 added 1.7% and the tech heavy Nasdaq gained 2.1%.

The indexes in Europe also advanced in the week after markets focused on earnings corporate events. The CAC 40 index edged up 0.1%, DAX 30 index rose 0.2% and FTSE 100 index advanced 0.5%.

The indexes in Asia closed mixed in the week and the benchmark index Sensex in Mumbai fell 1.3%, the Nikkei in Tokyo added 2.8% and the Hang Seng index in Hong Kong fell 0.4%.

U.S. New Home Sales Struggle

The U.S. Commerce Department estimated new home sales fell 0.9% in January to a seasonally adjusted rate of 321,000 homes. The first monthly decline follows the rise in home sales every month since October and rose to a one-year high in December to an annual rate of 324,000.

New home sales increased 3.5% in January from a year ago.

For, 2011 new home sales declined to 304,000, the fewest annual sales since the record keeping began in 1963.

German, UK Economies Shrank

European markets climbed after better-than-estimated corporate earnings. Italy successfully sold €3 billion of zero-coupon bonds and €1.5 billion of inflation-linked bonds today.

The Greek Parliament approved the debt swap deal with its private creditors, a pre-requisite for receiving the second bailout package worth €130 billion from the European Union, International Monetary Fund, and the European Central Bank.

The final agreement increased the loss to private bond holders to 53.5% of face value or the equivalent to 75% of overall loss.

Greece is expected to lower its debt to 120.5% of its gross domestic product by 2020, from the current debt of nearly 160%.

The German economy contracted 0.2% on a quarterly basis in the fourth quarter following a 0.6% expansion in the third quarter, an updated estimate from the Federal Statistics Office confirmed today.

The drop in Germany''s GDP in the fourth quarter of 2011 was due mainly to a shortfall in foreign trade, the Federal Statistics Office said.

The UK indexes gained on mixed domestic economic data. The UK gross domestic product contracted 0.2% sequentially in the fourth quarter, the second estimate released by the Office for National Statistics showed today.

Separately, the UK business investment declined a seasonally adjusted 5.6% or £1.7 billion to £28.7 billion in the fourth quarter compared to the prior quarter, the Office for National Statistics said.

Lloyds reported net loss for the year widened to £2.8 billion leading to a decline in banking stocks.