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U.S Market Update

Wed, Aug 26 2009, 15:33 GMT

TradeTheNews.com

- Equity trading has been unsettled this morning as the leading US indices bounce in and out of negative territory. The July New Homes Sales figure rose nearly 10% on a sequential basis, for their biggest m/m gain since early 2005. Some analysts cited a surge of first-time homebuyers cutting deals as the Federal tax credits for such first-time buyers are scheduled to expire in November. In another sign of housing normalization, the supply of new homes fell to 7.5 months from 8.5 months in June. The homebuilder ETF XHB is up 3% on the news. Front-month crude is testing the $71 handle after both API and DoE data showed fresh builds in inventories, against expectations for another round of declines.

- In earnings, Dollar Tree Stores reported Q2 results that were well ahead of estimates and hiked its guidance for the full year. Executives said back-to-school sales are doing well so far, while discretionary spending continues to grow. Williams Sonoma reported a modest profit (expectations were for a loss) and significantly improved its guidance for the coming two quarters and the full year. Footwear retailer DSW managed to outperform earnings estimates. Shares of DLTR are up 7%, DSW is up 9% and WSM has risen nearly 15%.
 
- The dollar maintained a firmer tone during the New York session, taking its cue from comments out of the Chinese Cabinet that it would curb excessive investment in industrial sectors experiencing overcapacity, helping to erode momentum in most commodities. The comments compounded earlier rhetoric from IFO members and the ECB's Gonzalez-Paramo on economic sustainability. EUR/USD headed below the 1.4250 level, where chatter indicated an Asian sovereign account had been bidding for euros for month-end commercial purposes. French President Sarkozy commented that he would discuss energy prices at G-20 meeting in September and warned the euro alone should not suffer in FX adjustments. The USD retraced its session gains as equities strengthened following the US new homes data.
 

Published on  Wed, Aug 26 2009, 15:34 GMT