Official newspaper of The University of Texas at Austin

The Daily Texan

Official newspaper of The University of Texas at Austin

The Daily Texan

Official newspaper of The University of Texas at Austin

The Daily Texan

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October 4, 2022

Upbeat US housing figures shore up markets

LONDON — A surprisingly strong U.S. housing survey helped shore up markets Thursday despite a mixed batch of corporate earnings and further evidence of a sharp slowdown in the economy of the 17 countries that use the euro.

Over the past couple of days, markets have been buoyed by solid U.S. earnings, notably from Apple Inc., and an indication from Federal Reserve chief Ben Bernanke that the central bank was prepared to do more, if needed, to shore up the U.S. economy.

A survey showing a 4.1 percent increase in the amount of signed but not yet completed house sales in the U.S. — also known as pending home sales — helped markets recover their poise after an earlier retreat.

The U.S. housing market has been in the doldrums for years and was largely responsible for the financial crisis that exploded in 2007. A recovery in the U.S. housing market is thought to be central to the recovery in the U.S., which in turn will have a big impact all round the world.

“Optimism fought back with data showing pending home sales from the U.S. increased to a near two-year high, injecting some life back into the global markets,” said Shavaz Dhalla, a financial trader at Spreadex.

In Europe, Germany’s DAX was up 0.5 percent at 6,739 while the FTSE 100 index of leading British shares rose 0.5 percent to 5,748. The CAC-40 in France though remained lower, trading 0.13 percent down at 3,229.

In the U.S., the Dow Jones industrial average was up 0.4 percent at 13,149 while the broader S&P 500 index rose 0.1 percent to 1,392.

The euro had benefited from the improving tone in the markets, trading 0.2 percent higher in early afternoon trading, before dropping slightly to $1.3222.

Earlier, markets had been under pressure after fairly downbeat updates from the likes of Banco Santander, Europe’s biggest bank by market capitalization, Deutsche Bank AG and AstraZeneca PLC deflated the mood in Europe. A mixed bag of earnings out of the U.S. from PepsiCo., ExxonMobil and United Continental and a smaller-than-anticipated fall in weekly U.S. jobless claims failed to change the general tone at the open on Wall Street before the release of the pending home sales figures.

A survey from the European Commission showing economic sentiment in the eurozone down more than expected in April added to the gloom over Europe’s growth prospects, reinforcing expectations that the eurozone will soon be confirmed to be in recession.

The Commission’s main indicator fell from 94.5 to 92.8— the consensus in the markets was for a far more modest decline to 94.

“April’s survey confirmed the downbeat picture painted by other recent indicators and dashed any lingering hopes that the eurozone economy may escape a double-dip recession,” said Ben May, European economist at Capital Economics.

In recent weeks, there has been an increasing backlash against the austerity drive in many European countries amid worries that governments will be unable to deliver their debt-reduction plans as their economies tank.

“With political divisions opening up across Europe, pressure is building on Germany and the European Central Bank to do more and rein back on the current austerity based approach,” said Michael Hewson, markets analyst at CMC Markets.

Earlier in Asia, Japan’s Nikkei 225 index closed slightly ahead at 9,561.83 as traders proceeded with caution ahead of the Bank of Japan’s policy-setting meeting Friday.

South Korea’s Kospi also zigzagged until finally setting 0.1 percent higher at 1,964.04. Hong Kong’s Hang Seng posted a 0.8 percent gain to 20,809.71. In mainland China, the benchmark Shanghai Composite Index edged 0.1 percent lower to 2,404.70.

Oil markets were fairly tepid, with benchmark oil for June delivery up 51 cents at $104.64 per barrel in electronic trading on the New York Mercantile Exchange.

Printed on Friday, April 27, 2012 as: US housing market rebounds, helps out consumer confidence

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Upbeat US housing figures shore up markets