While you were sleeping: US data mixed, dollar rises, Wall St dips

Wednesday 30th September 2009

US consumer confidence unexpectedly fell this month, while house prices rose, suggesting recovery in the world’s biggest economy is still patchy, with the threat of higher unemployment looming.

The Conference Board’s consumer confidence index fell to 53.1, from a revised 54.5 in August. Economists had expected an increase in the measure to 57.

The board’s measure of jobs being ‘hard to get’ rose to 47 from 43 while the measure of jobs being ‘plentiful’ fell to 3.4 from 4.3, the lowest since 1983.

Consumers deemed their present situation had worsened to 22.7 from 25.4 while one-year inflation expectations fell to 5.2% from 5.4%.

The US jobless rate is forecast to exceed 10%, having climbed to a 10-year high of 9.7% last month. US chief executives aren’t ready to increase hiring, according to a Business Roundtable survey.

The S&P/Case-Shiller home-price index declined by 13.3% in July from a year earlier, the smallest decline in about one and a half years. The gauge rose 1.2%, seasonally adjusted, from the previous month.

Shares on Wall Street pared their gains after the data. The Dow Jones Industrial Average fell 0.3% to 9760.72 and the Standard & Poor’s 500 declined 0.1% to 1062.21. The Nasdaq Composite fell 0.2% to 2127.07.

Home Depot, the home improvement chain, fell 1.7% to US$26.80, leading the Dow lower.

MBIA Inc., the financial guarantee company, declined 4.6% to US$7.84 after Standard & Poor’s cut its credit rating and left the outlook at ‘negative’ amid ongoing losses.

The US dollar rose to the strongest in two weeks against the euro as US consumer confidence fell, sapping demand for higher yielding, or riskier assets denominated in other currencies.

Helping underpin the greenback, Russia said it didn’t plan to reduce the proportion of US Treasuries in its foreign exchange reserves.

The dollar strengthened to $1.4565 per euro from $1.4622 yesterday. The yen weakened to 90.13 per dollar from 89.63. The Japanese currency traded at 131.29 against the euro.

The US Dollar Index, which measures the greenback against a basket of six major currencies, rose 0.1% to 77.10.

Copper fell as the greenback’s advance curbed demand for commodities as an inflation hedge.

Copper futures for December delivery fell 0.2% to US$2.7215 a pound on the Comex division of the New York Mercantile Exchange.

Crude oil fell amid speculation US Energy Department figures this week will show stockpiles are climbing.

Crude oil for November delivery slipped 1.3% to US$65.97 a barrel on the New York Mercantile Exchange.

Gold futures for December delivery fell 0.2% to US$991.80 an ounce in New York.

Bill Gross, who manages the world’s biggest bond fund at Pacific Investment Management Co., said he has been buying longer-dated Treasury bonds at the expense of mortgage debt as a hedge against inflation, according to a Bloomberg interview.

“There has been significant flattening on the long end of the curve,” Gross said, according to the report.

European stocks rose after BNP Paribas announced plans to raise capital to repay government aid. The Dow Jones Stoxx 600 gained 0.2% to 243.59.

BNP Paribas climbed 2.4% after announcing a 4.3 billion euro rights offer. The lender aims to repay 5.1 billion euros and 226 million euros of interest to the French government.

Siemens fell 1.7% after chief executive Joe Kaeser said orders have declined and the manufacturer has to make further jobs cuts. Fourth-quarter order bookings will fall 20%.

Legal & General rose 4.8%, helped by media reports it is preparing to fend off a takeover attempt. Independent News & Media Plc fell 13% after the publishing group proposed offering bondholders 46% of the company’s equity in a debt swap.

Among regional benchmarks, the UK’s FTSE 100 fell 0.1% to 5159.72, Germany’s DAX 30 dropped 0.4% to 5713.52 and France’s CAC 40 fell 0.3% to 3814.10.

Businesswire.co.nz

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