World Markets Edge Lower; U.S. Home Starts Fall

Nichole Harper
20 Mar, 2012
New York City

U.S indexes weakened after world markets indexes declined on the rising concerns about China

[R]9:45 AM New York – U.S indexes weakened after world markets indexes declined on the rising concerns about China’s economic growth. Indexes, Europe, UK, Canada, China and Australia declined after home prices edged lower in China. Home starts in U.S. fell in February.[/R]

Stocks were under pressure around the world after investors worried that more gains may be harder to come by as economies around the globe face higher oil prices and China tackles slower growth.

Over the last five months market sentiment around the world has improved after the euro zone passed second bailout for Greece and the U.S. economy delivered improving economic indicators.

However, the recent surge in oil price and has stoked concerns that the U.S. consumer spending may slow down and emerging markets of China, India and Brazil may struggle to contain inflation rooted in the rising cost of energy.

Market indexes in Europe were down more than 1% and resource sector weighted market index in the UK lost as much as 1.1%.

In Paris trading, the CAC-40 Index fell 43.81 or 1.2% to 3,534.04 and in Frankfurt the DAX Index edged lower 93.45 or 1.3% to 7,061.03.

Stock indexes in New York also declined following the weakness in world markets. Market sentiment in Asia was weak after a private survey showed that home prices in 45 cities in China declined in February as government restricted speculation.

China also lifted retail gasoline prices for the second in as many months. The price of gasoline and diesel rose between 6% and 7% and auto sales are likely to trail the current year forecast. India is also battling record bout of food and energy price inflation.

Trading volume was thin in Asian markets as markets in Japan were closed for a national holiday and benchmark indexes in Hong Kong declined 1.1% and in South Korea fell a fraction.

Indexes in Australia were also lower after BHP Billiton and Rio Tinto officials made cautious remarks about the iron ore demand growth from China as the nation engineers a soft landing.

Crude oil prices declined more than $2 a barrel and hovered near $123 a barrel in London trading in New York the immediate month delivery future declined 65 cents to $107 a barrel.

However, the latest data on housing market from the Commerce Department today was better than expected. Home starts in February declined 1.1% from the previous month to a seasonally adjusted annual rate of 698,000 homes. The starts were 35% higher from a year ago month.

Housing starts in January were revised to an annual rate of 706,000, the highest since the rate of 699,000 homes in October 2008.

Single family starts declined 9.9% to 457,000 rate and multi-family homes starts soared 21% to annual rate of 241,000.

Building permits increased 5.1% in February.