While you were sleeping: US home sales drop
Sept. 23 (BusinessDesk) - Equities on both sides of the Atlantic declined, along with commodities including nickel,
copper, and oil after an unexpected drop in US existing home sales and comments by China suggesting it might not aim to
bolster economic growth as much as expected.
In late afternoon trading in New York, the Dow Jones Industrial Average fell 0.43 percent, the Standard & Poor’s 500 index dropped 0.72 percent, while the Nasdaq Composite Index retreated 1.28 percent.
Declines in shares of Nike and those of Caterpillar, both down 1.5 percent, led the Dow lower.
A National Association of Realtors report showed US existing home sales unexpectedly dropped in August, falling 1.8
percent to an annual rate of 5.05 million units. It was the first drop in five months.
"There was a marked decline in all-cash sales from investors,” Lawrence Yun, National Association of Realtors’ chief
economist, said in a statement. "On the positive side, first-time buyers have a better chance of purchasing a home now
that bidding wars are receding and supply constraints have significantly eased in many parts of the country.”
"As long as solid job growth continues, wages should eventually pick up to steadily improve purchasing power and help
fully release the pent-up demand for buying,” according to Yun.
Separately, a Federal Reserve Bank of Chicago report showed US economic activity declined last month.
Meanwhile, Fed Philadelphia President Charles Plosser, a critic of the central bank’s loose monetary policy, said he
will retire next year.
“It could be a loss for that more hawkish group,” Dean Croushore, an economics professor at the University of Richmond
in Virginia and a visiting scholar at the Philadelphia Fed, where he was a vice president and economist from 1989 to
2003, told Bloomberg News. “He’s a pretty powerful proponent of that sort of view, and people respect him for that.”
Also weighing on markets were comments by China’s Finance Minister Lou Jiwei suggesting the world’s second-largest
economy is adjusting to a slower pace of growth.
"China will not make major policy adjustments due to changes in any one economic indicator," Lou said on Sunday at a
meeting of finance ministers and central banker governors from the Group of 20 in Australia.
In Europe, the Stoxx 600 Index ended the day with a 0.5 percent decline from previous close, as did Germany’s DAX.
France’s CAC 40 fell 0.4 percent.
The UK’s FTSE 100 dropped 0.9 percent. Shares of Tesco plunged 11.6 percent after the company said it overstated its
first-half profit estimate by about 250 million pounds, or about US$409 million.
"Tesco used to be the most innovative store in the grocery market but given that Aldi and Lidl have taken its customers
by cutting the price of their products without compromising too much on quality, Tesco has been extremely slow to
respond to those changes," AvaTrade chief market analyst Naeem Aslam told Reuters. “ Today's news is another disaster
for the company.”
Bucking the trend, shares of US-based Sigma-Aldrich soared 33.5 percent after Germany’s Merck KGaA said it agreed the
company for US$17 billion in cash. Shares of Merck rose 4.1 percent to 72.38 euros.
(BusinessDesk)