Weak Home Builders; Higher Oil Lifts Europe

123jump.com Staff
17 Oct, 2008
New York City

U.S. home starts in September dropped to 26-year low and fell two-third from the peak only two years ago. Crude oil gained on a speculation that OPEC will agree on a lowered production volumees. European markets close higher. Natural resource linked markets, Peru, Canada and UK closed higher.

4:30PM New York, 10:30AM Frankfurt, 6:30AM Sydney[R]– September U.S. home starts fell to the lowest level last seen in 26 years and are now one third of the level only two years ago. European markets ride on a rise in crude oil price.[/R]

Global Markets

U.S. stocks traded volatile on weak existing home sales data confirmed the broad trend in the economy. Investors returned to the market in the early afternoon to cover the expiring options. Home builders fell.

U.S. home starts fell to a 26-year low as difficult lending conditions drive speculators away from the market. Total new homes construction starts has fallen nearly two third from the record in January 2006. European markets ride on a rise in oil prices.

Crude oil prices rebounded in London on a speculation that member nations will agree on a revised production quota imposed by OPEC. The association advanced its meeting next week to set price and production targets. Iran and Venezuela are leading the charge for production freeze.

Advanced Micro Devices rose after the quarterly loss declined. Google surged 9% after quarterly earnings rose 26%. Honeywell fell after earnings rose 16%. ING Groep NV plunged 29% on capital worries. Wilmington Trust rose after net income fell 50%.

Indian stocks plunged 6% and the Sensex index dropped below 10,000 for the first time in two years led by a fall in financial and realty stocks. Weak investor confidence, tight interbank lending and rising interest rates played to the investor sentiment. Mutual funds redemptions stay at elevated levels. Sensex is down nearly 52% from the high in the year.

North American Markets

Dow Jones Industrial Average fell 127.04 or 1.4% to a close of 8,852.22, S&P 500 Index closed down 5.93 or 0.63% to 940.50, and Nasdaq Composite Index decreased 6.42 or 0.37% to close at 1,711.29. In Toronto TSX Composite Index added 269.17 or 2.9% to 9,539.14.

Of the 30 stocks in Dow Jones Industrial Average 9 closed higher and 21 closed lower.

Kraft Foods led gainers in the index with a rise of 4.3% followed by increases in Home Depot Inc of 2.9%, in Walt Disney Company of 2.2%, in Merck & Company of 1% and in General Motors of 0.8%.

Caterpillar Inc led decliners in the Dow Jones Industrial Average with a fall of 7.3% followed by losses in Citigroup Inc of 6.1% and in Bank of America of 4% and in United Technologies of 3.9%.

Of the stocks in S&P 500 index, 215 increased, 283 declined and 2 were unchanged. Of the index stocks, 60 rose more than 3% and 87 fell more than 3%. And 6 rose more than 10%.

Torchmark Corp led decliners in the S&P 500 index with a fall of 14.2% followed by losses in MGIC Investment Corp of 13.7%, in AIG of 13.6%, in Leggett & Platt of 12.3%, in Intuitive Surgical of 12% and in Zions Bank of 9.7%.

MBIA Inc led the gainers in the S&P 500 index with a surge of 32% followed by gains in SLM Corp of 24%, in Southwestern Energy of 21%, in Peabody Energy of 18%, in Macy’s Inc of 16%, in Nucor Corp of 16% and in Apache Corp of 15.9%.

South American Markets Indexes

Colombia led gainers in the region with a rise of 2.7% followed by increases in Argentina of 2.5%, in Peru of 1.9% and in Chile of 1.5%.

Mexico fell 0.7% and Brazil declined 0.1%. Venezuela added 0.2%.

Europe Markets Review

In London FTSE 100 Index closed lower 201.62 or 5.22% to 4,063.01, in Paris CAC 40 Index increased 148.92 or 4.68% to close at 3,329.92 and in Frankfurt DAX index higher 158.52 or 3.43% to close at 4,781.33. In Zurich trading SMI increased 381.09 or 6.66% to close at 6,099.62.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 235.37 or 2.78% to 8,693.82, Hang Seng index in Hong Kong decreased 676.31 or 4.44% closed to 14,554.21. CSI 300 index in China higher 12.36 or 0.68% closed to 1,833.26. ASX 200 index in Australia decreased 42.60 or 1.06% to close 3,970.80. The KL Composite index in Malaysia lower 14.79 or 1.61% closed to 905.23.

The Kospi Index in South Korea decreased 33.11 or 2.73% to close at 1,180.67. SET index in Thailand closed lower 6.42 or 1.34% to 471.31, and JSE Index in Indonesia decreased 63.83 or 4.36% to 1,399.42. The Sensex index in India decreased 606.14 or 5.73% closed to 9,975.35.

Commodities, Metals, and Currencies

Crude oil increased $2.24 to close at $72.09 a barrel for a front month contract, natural gas increased 15 cent to $6.85 per mBtu and gasoline futures increased 4.8 cents to close at 167.01 cents per gallon.

Wheat futures closed up 11 cents in Chicago trading and closed at $5.66 a bushel. Sugar increased 0.42 cent to 11.58 cents a pound. Soybean future closed up 26.50 cents to $9.06 a bushel.

Gold decreased $14.90 in New York trading to close at $789.00 per ounce, silver closed down 29 cents to $9.34 per ounce and copper for the front month delivery increased 4.15 cent to $2.127 per pound.

Dollar edged higher against euro to $1.3430 and dropped against yen to 101.45.

Yields on 10-year U.S. bonds decreased to 3.91% and with 30-year maturities increased to 4.30%.