US& GLOBAL MARKET 29.7.2009

Stocks ended mixed Tuesday as investors weighed a weaker-than-expected consumer confidence report and a better-thanexpectedhousing report in the aftermath of a big rally. Stocks have gained for the last two weeks, as investors have breatheda sigh of relief that second-quarter results have been mostly better than expected. The Dow and S&P 500 have added around11.5% and the Nasdaq has gained 12%. But after such a big run in a short period of time, stocks have become vulnerable. TheDow Jones industrial average lost 0.1% (-11.8 pts, close 9,096.7). The Nasdaq gained 0.4% (+7.6 pts, close 1,975.5) and theS&P 500 index lost 0.3% (-2.6 pts, close 979.6). In currency trading, the dollar fell against the euro and fell against theJapanese yen. U.S. light crude oil for September delivery fell US$1.15 to settle at US$67.23 a barrel on the New YorkMercantile Exchange. (CNNmoney)

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A gauge of U.S. house prices posted its first monthly gain in three years, but consumer confidence this month fellmore than forecast. The S&P/Case-Shiller home-price index rose 0.5% m-o-m in May, the first gain since July 2006 andbiggest since May of that year, the group said yesterday in New York. The S&P/Case-Shiller home-price index was down17.1% y-o-y, less than projected and the smallest y-o-y drop in nine months. Economists forecast the index would drop 17.9%y-o-y, according to the median of 32 projections in a Bloomberg News survey. The Conference Board’s confidence indexdropped to 46.6, a second consecutive decline, following a reading of 49.3 in June, the New York-based research group said.The figure reached a record low of 25.3 in February. (Bloomberg)

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U.K. house prices rose for the first time in 17 months in June, led by gains in London, the Land Registry said yesterday.The average price of a home in England and Wales increased 0.1% m-o-m, the first gain since January 2008, to 153,046pounds (US$253,000), the government agency said in a report on its Web site. Values in the capital rose 2%. The report addsto evidence that the market for residential property is stabilizing while the economy is mired in the worst recession in ageneration. A survey published this week by London-based property researcher Hometrack Ltd. showed prices held their valuefor a third month in July. Half of the 10 regions tracked by the Land Registry showed an increase from the previous month.Yesterday’s national reading is down 14% y-o-y. (Bloomberg)

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Japanese manufacturers probably increased production for a fourth month in June, capping the largest quarterly outputexpansion in more than 50 years. Production climbed 2.5% from May, according to the median forecast of economistssurveyed before a Trade Ministry report tomorrow. That would be an 8.3% quarterly gain, the biggest increase since the end ofthe Korean War in 1953. Leaner inventories and US$2.2trn in emergency spending by governments worldwide have stabilizedglobal demand, giving a lift to Japanese exports. Automakers including Mitsubishi Motors Corp., benefiting from subsidies onfuel-efficient cars, are raising production and reinstating overtime. Japan’s output will still be a quarter below last year’s,economists said. (Bloomberg)

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China’s rate of inflation may rebound in 2H09, the People’s Bank of China said yesterday, adding that it plans to keeppolicies stable to ensure an economic recovery. China’s economy is at a “critical” stage, the central bank said in a report on itsWeb site. It said the acceleration in growth in 2Q09 from 1Q09 had exceeded expectations. Premier Wen Jiabao and the rulingCommunist Party’s Politburo last week pledged to maintain a “moderately loose” monetary policy, countering speculation thatrecord new loans and surging asset prices will trigger a tightening. Consumer prices fell 1.7% y-o-y in June, the fifth monthlydecline and the biggest drop since 1999. (Bloomberg)

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India’s central bank may start reversing its interest-rate cuts in early 2010 as food and energy prices fan inflation, after itkept borrowing costs unchanged yesterday to bolster economic growth. “On the way forward, the Reserve Bank will have toreverse the expansionary measures to subdue inflationary pressures while preserving the growth momentum,” GovernorDuvvuri Subbarao said. Inflation may “creep up” to about 5% by March next year compared with an April estimate of 4%, hesaid. India is vulnerable to inflation as it relies on imported oil and demand for food from its 1.2bn people exceeds supply.Besides being buffeted by higher global commodity costs, inflation in India is also fuelled by congested roads and ports andpower shortages that add to the cost of doing business. (Bloomberg)