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Global Market Wrap-Up - August 24, 2010

August 25, 2010 - 6:49am — mhanna
Tuesday, August 24, 2010
By: 
Mark Hanna

Despite expectations for a very weak existing home sales figure, the number came in even worse than estimated and U.S. stocks sold off as fears of double dip continue to grip the market.  The S&P 500 fell 1.5% and NASDAQ 1.7%.  All eyes were on existing home sales, which make up over 90% of transactions (new home sales are released Wednesday).

  • Sales of previously occupied homes in the United States fell 27% in July, the weakest showing in 15 years, the National Association of Realtors said Tuesday. It was the largest monthly drop in the four decades that records have been kept.
  • The NAR said sales of previously occupied homes plunged in July to an annual rate of 3.83 million, much worse than the 4.7 million estimate from economists.
While the tax credit #2 ended in April there were provisions added on allowing closing to take place in the ensuing months.  Hence July was the first month showcasing the housing market in its organic state in over a year and a half.  Obviously the results were not encouraging.  The economic report docket is full the rest of the week so volatility should remain high.

 
Ten year yields once again faltered, dropping from 2.6% to 2.5%, now at the lowest rate since March 2009.
  • Stock traders are "taking their cues from the bond market," said Lawrence Glazer, a managing partner at Mayflower Advisors. "It really has been a dramatic and frightening shift" in Treasury prices, which has spooked investors and led to worries about another recession, Glazer said.
Commodities were generally lower with the exception of precious metals.  Crude oil fell 2% ($71.63) and copper dropped 1.6% ($3.24).  Meanwhile, gold gained 0.4% ($1231.80) and silver surged 2.15% ($18.37).



In Europe, Britain's FTSE 100 fell 1.5%, Germany's DAX 1.3%, and France's CAC-40 1.8%.

  • Germany's deficit rose sharply to 3.5% of economic output in the first half of 2010, putting it on track to break EU budget rules due to the costs of the global economic and financial crisis.  Net borrowing for the first six months of the year came in at euro42.8 billion ($54.37 billion) -- more than double the euro18.7 billion a year earlier.. In 2009, the agency had reported a much smaller first-half deficit of 1.5%.
Asian stocks were mixed with a gain of 0.4% in China, offset by losses in Japan (-1.3%) and India (-0.5%).  The yen continued to show strength as a 'safety trade' and reached 15 year highs versus the U.S. dollar.
  • Chinese shares rebounded Tuesday on hopes the government will ease access to credit, led by real estate and steelmakers.  The market rose for the first time in three days on mounting expectations slowing economic growth will prompt the government to ease credit curbs.
Brazil fell 1.4%


Mark Hanna, known in the financial community as "TraderMark," provides his insightful daily market coverage in this column, exclusive to Euro Pacific Capital.

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