US & GLOBAL MARKET 23.7.2009

The Nasdaq gained for the 11th straight session Wednesday as investors welcomed Apple's profit results, but concerns about Boeing and Coca-Cola's profits dragged on the Dow. The Dow Jones industrial average lost 0.4% (-34.7 pts, close 8,881.3). The Nasdaq gained 0.5% (+10.2 pts, close 1,926.4) and the S&P 500 index lost 0.1% (-0.5 pts, close 954.1). In currency trading, the dollar gained against the euro and fell versus the Japanese yen. U.S. light crude oil for September
delivery fell 21 cents to settle at US$65.40 a barrel on the New York Mercantile Exchange. (CNNmoney)

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Federal Reserve Chairman Ben S. Bernanke said a potential wave of defaults in commercial real estate may present a “difficult” challenge for the economy, without committing to additional steps to aid the market. Bernanke, testifying before the Senate Banking Committee yesterday, urged lenders to modify “problem” mortgages to avert defaults. Christopher Dodd, the Connecticut Democrat who chairs the panel, told Bernanke that “some have suggested” the commercial market “may even dwarf the residential mortgage problems” in the U.S. The state of commercial real estate was one of the most-asked-about subjects in questioning by lawmakers so far in Bernanke’s two days of testimony on the economy. Bernanke said it’s too early
to tell how effective the Fed’s main initiative in the area will be. (Bloomberg)
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U.S. home prices had the smallest annual drop in 10 months, signalling the free fall of property values is abating in the three-year housing slump at the centre of a global recession. Prices declined 5.6% y-o-y in May and rose 0.9% m-o-m, the Federal Housing Finance Agency in Washington said yesterday. Economists expected a 0.2% drop for the month, according to
the median of 16 estimates in a Bloomberg survey. Five U.S. regions showed price increases in May from April, the FHFA said. Job losses and record foreclosures have deterred buyers and slashed U.S. home prices 33% since the July 2006 peak, according to the S&P/Case-Shiller index. The highest unemployment since 1983 and the biggest foreclosure rate on record
thwarted government efforts to revive real estate demand. (Bloomberg)
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European industrial orders declined more than economists expected in May as the worst recession in six decades curtailed demand for machines and equipment. Orders to industrial companies in the euro region fell 30.1% y-o-y, the European Union’s statistics office in Luxembourg said yesterday. That was the 10th straight drop and followed a record 35.3%
decline in April. Economists forecast a 27.9% fall in May, according to the median of 14 estimates in a Bloomberg survey.From the prior month, May orders fell 0.2%, also more than economists expected. (Bloomberg)

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Bank of England policy makers voted unanimously to maintain their asset-purchase program in July, saying there was no clear evidence to support an increase as the risks to the economy had probably diminished. The nine-member Monetary Policy Committee, led by Governor Mervyn King, kept the benchmark interest rate at 0.5% and said they will review the size of
the money-printing plan in light of new economic forecasts in August, according to minutes of the July 9 decision released by the bank yesterday in London. Policy makers didn’t allude to investor expectations for an increase in the plan size, which led to a sell-off in government bonds after the July decision to keep it unchanged. While data suggest the housing market slump now
may have eased and the recession has shown signs of moderating, a recovery has yet to become entrenched in the British economy. (Bloomberg)

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The U.K.’s house-price slump will persist until 2012 and hurt consumer spending, the National Institute of Economic and Social Research said. Home values will resume their decline because recent gains were driven by a lack of available homes and the number of mortgages remains 65% lower than before the financial crisis, the London-based institute said yesterday. It also predicts gross domestic product will keep falling until the final quarter of this year. (Bloomberg)

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Japanese demand for banks loans fell over the past three months as companies turned to an improving credit market for funding and households cut spending amid the worst recession since World War II. An index of demand for loans by businesses declined to minus 14 in July from 13 in April, the Bank of Japan said in a quarterly survey of loan officers in Tokyo yesterday. Households’ desire to borrow dropped to minus 14, the lowest since the central bank began the report in April 2000. Some Japanese may remain reluctant to take on debt until there are more signs of a sustainable economic recovery. Japanese banks became more willing to lend to companies than they were three months ago, the survey showed. An index of willingness to lend money to large businesses rose to 5 this month from minus 1 in April. (Bloomberg)
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