Home Inventories Rise; Financials Struggle

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

U.S. stocks fell in the morning trading as investors face more asset write downs in financial sector. AIG may write down $2.4 billion in mortgage related assets according to a latest estimate. Existing homes sales rose 3.1% in July from June but fell 13% from a year ago and median home prices declined 7%. Crude oil edged higher and European markets edged higher as markets near closure. Asian markets closed up with Hong Kong surging 3.5% and Japan adding 1.7%.

[R]11:00AM New York – U.S. stocks decline as investors face more losses at financial companies.[/R]

Weak Home Resale

Existing home sales in July increased 3.1% to 5 million from 4.85 million in June but fell 13.2% in the month from a year ago pace of 5.76 million units. The data released by the National Association of Realtors in Washington. Median home prices in the month fell 7.1% to 212,400 from 228,600 in the month a year ago.

Lawrence Yun, NAR chief economist, said home prices in some regions could soon increase. “Sales have picked up significantly in several Florida and California markets. Home prices generally follow sales trends after a few months of lag time.

Still, inventory remains high in many parts of the country and will require time to fully absorb. We expect more balanced conditions in 2009 and will eventually return to normal long-term appreciation patterns.”

The Ninth Bank Failure

On Friday last week, FDIC closed down ninth bank for the year so far as banks struggle with loans to speculative home buyers. On August 22, 2008, The Columbian Bank and Trust Company, Topeka, KS was closed by the Kansas Office of the State Bank Commissioner and the Federal Deposit Insurance Corporation (FDIC) was named Receiver.

The nine branches of The Columbian Bank and Trust Company will reopen on Monday as branches of Citizens Bank and Trust. Depositors of the failed bank will automatically become depositors of Citizens Bank and Trust.

Stocks Look at Commodities for Direction

Commodities markets continue to dominate trading in stocks. Future prices of crude oil edged higher and traded as high as $115 a barrel as investors hope of rising demand from China after the end of the Olympics Games. Gold fell $5.80 to $827.70 and natural gas declined 12 cents to $7.773. Soybean, Cocoa and corn futures edged 2% higher in the morning trading but base metal prices edged lower. Copper, Nickel and aluminum fell between 2% and 3%.

LDK Solar Company ((LDK)) jumped $3.40 to $49.20 after it said that shipment of silicon wafers will be higher than estimates for 2009. The company estimated sales between $2.8 billion and $3 billion above the estimate of $2.4 billion.

AIG ((AIG)), the member of Dow Jones Industrial Average and the largest insurance company in the world dropped 96 cents to $18.92 after Credit Suisse estimated an asset write down of $2.4 billion.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 212.62 or 1.68% to 12,878.66, , Hang Seng index in Hong Kong increased 712.73 or 3.50% closed to 21,104.79.ASX 200 index in Australia increased 83.50 or 1.69% to close 5,014.90. The KL Composite index in Malaysia decreased 6.87 or 0.63% closed to 1,078.73.

The Kospi Index in South Korea increased 5.20 or 0.35% to close at 1,502.11, SET index in Thailand closed lower 3.73 or 0.55% to 678.20 and JSE Index in Indonesia increased 6.73 or 0.32% to 2,127.22. The Sensex index in India increased 48.86 or 0.34% closed to 14,450.35.

Europe Markets Review

In London FTSE 100 Index traded higher 135.40 or 2.52% to 5,505.60, in Paris CAC 40 Index decreased 22.94 or 0.52% to 4,377.51 and in Frankfurt DAX index traded lower 6.69 or 0.11% to 6,335.73. In Zurich trading SMI increased 34.79 or 0.49% to 7,128.91.

U.S. Earnings Review

A-Power Energy Generation Systems, Ltd, engaged in installing and testing distributed power generation and micro power grids reported second quarter revenues increased 21.5% to $65.7 million from $54.1 million a year ago. Net income in the quarter rose 4% to $6.2 million or 20 cents per diluted share compared to net income of $6.0 million a year ago.

A-Power Energy Generation Systems, Ltd ((APWR)) in the last one year traded as high as 31.89 in June 2008 and as low as 7.40 in March 2008. Based on the Friday’s trading closing price the company has a market cap of 675.40 million.