While you were sleeping: US confidence, home prices rise; dollar dips

Wednesday 26th August 2009

US consumer confidence rose more than expected and house prices posted their first gains in three years, adding to signs the world’s biggest economy is emerging from recession.

The Conference Board’s confidence index rose to 54.1 this month, the first gain since May, while July’s reading was revised to 47.4 from 46.6. The S&P/Case-Shiller home-price index climbed 2.9% in the second quarter, the first increase since 2006.

President Barack Obama nominated Federal Reserve Chairman Ben Bernanke for a second term leading the central bank after he helped steer the US economy through its worst slump since the 1930s.

Bernanke “helped put the brakes on our economic freefall,” Obama said.

US stocks edged up after the economic data. The Dow Jones Industrial Average climbed 0.3% to 9539.29 and the Standard & Poor’s 500 rose 0.2% to 1028.00. The Nasdaq Composite rose 0.3% to 2024.23.

Home Depot, the world’s large home-improvement chain, rose 1.1% to US$27.32 on signs of improving consumer sentiment. Pulte Homes Inc., the biggest US builder, rose 3.5% to $13.06 after the home-price data.

Boeing Co. gained 2.4% to US$48.25, leading the Dow higher. Exxon Mobil slipped 0.9% to US$70.68 as the price of crude oil declined.

More than 72% of companies in the S&P 500 beat the average analyst estimate for second- quarter earnings, according to Bloomberg, the most since at least 1993.

The US consumer price index may fall 0.7% this year, before resuming its climb with a 1.4% pace in 2010 and 1.5% in 2011, according to Christina Romer, the White House’s chief economist.

Crude oil fell after briefly touching US$75 a barrel. Crude oil for October delivery dropped 3% to US$72.04 a barrel on the New York Mercantile Exchange.

Copper for December delivery fell 1.4% to US$2.89 a pound in New York.

Stockpiles of copper monitored by the London Metal Exchange rose 1.3% to 296,600 metric tons.

December gold futures rose 0.6% to US$949.20 an ounce.

Treasuries after the White House said inflation will remain benign and after the Treasury sold US$42 billion of two-year notes, the first sale in a week where US$109 billion of government debt is slated for sale.

The yield on the benchmark 10-year notes fell 3 basis points to 3.44% and the yield on 30-year Treasuries slipped 4 basis points to 4.22%.

The two-year notes drew a yield of 1.119% in the auction while the bid-to-cover ratio, which gauges demand by comparing total bids with amount of securities offered, was 2.68. The yield on existing two-year notes was unchanged at 1.02%.

Indirect bidders, which include foreign central banks, bought 49.4% of the notes, up from 33% in July’s sale but down from 68.7% in June.

European stocks rose, with the Dow Jones Stoxx 600 Index rose 0.4% to 237.84, its fourth daily gain.

Among national benchmarks, the UK’s FTSE 100 climbed 0.4% to 4916.80, Germany’s DAX 30 rose 0.7% to 5557.09 and France’s CAC 40 gained 0.8% to 3680.61.

Vodafone Group Plc rose 2.4% and French Telecom rose 3.7% after analysts at JPMorgan raised European phone companies to ‘overweight.’

The US dollar traded at $1.4309 per euro in New York, from $1.4304. The greenback slipped to 94.11 yen from 94.56. Japan’s currency traded at 134.65 per euro from 135.27.

Businesswire.co.nz

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