Weak Consumer Confidence and Home Prices

123jump.com Staff
25 Mar, 2008
New York City

February consumer confidence index fell to a five-year low as rising fuel and energy prices and falling home values affected consumers. The outlook for the next six months according to index appear to be gloomy. Home prices in February declined 10.7% from January. The two measures left U.S. market averages were lower in the morning trading hours. European markets jumped more than 2.5% and Asian markets rallied. In the overnight rally, India and Hong Kong surged above 6%.

[R]10:45AM New York – U.S. stocks edged lower after consumer confidence declines.[/R]

U.S. stocks edged lower after a brief and spurt of enthusiasm at the opening. S&P 500, Dow, and Nasdaq fell after one hour of trading.

Analysts downgraded stocks of Bank of America, Merrill Lynch, and Lehman Brothers. Bank of America ((BAC)) lost $1.50 to $40.97, Lehman Brothers ((LEH)) declined $2.30 and Merrill Lynch lost $1.34 to $47.09.

The Conference Board reported that consumer confidence index declined to 64.5 from the revised 76.4 in February. With the gasoline prices at a record high, falling home values, rising food prices and worries related to job market has put consumer on the edge. The index was recorded at a five-year low.

A controversial index that tracks metropolitan home prices in 20 largest markets across the nation, S&P/Case Shiller Index, dropped 10.7% from January following 9% decline in decline in December.

European markets Surge

European markets surged on the first day of trading this week. Financials led the gainers. HBOS, leading mortgage lender in the UK soared 14%, UBS, Credit Suisse, and Barclays added more than 7%.

Heineken agreed to purchase Drinks Union AS, Czech based alcohol and beer company for an undisclosed price.

The troubled airline Alitalia soared to a daily limit of 10% before the trading halts were implemented on the speculation that Air France-KLM will make a bid for the carrier despite the Berlusconi talk of finding a local buyer.

Asian markets rallied tracking gains in the U.S. markets on Monday

In Tokyo Nikkei 225 Index closed higher 265.13 or 2.12% to 12,745.22, in Hong Kong Hang Seng index increased 1356.30 or 6.43% closed to 22,464.52. Australia ASX 200 index increased 190.90 or 3.72% to close 5,318.40. In Malaysia KL Composite index increased 28.93 or 2.41% closed to 1,229.95.

In South Korea Kospi Index increased 19.63 or 1.19% to close at 1,674.93, in Thailand SET index closed higher 13.03 or 1.61% to 820.31 and Indonesia JSE Index edged increased 80.32 or 3.43% to 2,419.62. Sensex index in India increased 928.09 or 6.07% to 16,217.49.