Economic data releases out of the United States gave investors some cheer. Fewer job losses in the United States is indicating that there may be a sustained economic recovery in the U.S. underway. Jobless claims fell to 361,000 beating expectations while the U.S. trade deficit in June was $42.9 billion against expectations of $47.5 billion. Furthermore, data from the National Association of Realtors indicates that home values have jumped the most since 2006 in a sign of stabilisation in the real estate market. These data releases all support our assertion that further quantitative easing from the Federal Reserve is not as imminent as many market participants have come to expect. The Australian dollar managed to hold its ground overnight and opens this morning at 1.0580 even as the U.S. gained against most currencies.
However, the situation in Europe continues to dent investor confidence. Markets reversed earlier gains after the Wall Street Journal reported former European Central Bank official Otmar Issing as saying that he believed that it was wrong for investors to expect the ECB to buy government bonds to arrest the European debt crisis. The ECB has also released the results of a survey of economists that shows expectations of a worsening contraction in the euro zone. As time continues to lapse without any further concrete plans from the ECB to start its proposed bond buying plan, there is an increased likelihood that the euro will continue to trade lower. The common currency opens the morning at 1.2300.
U.S. share markets have closed the day relatively flat as positive U.S. data releases offset continued fears surrounding the European debt crisis. The S&P 500 has closed 0.04% higher at 1,403 with homebuilding stocks gaining more than 2%. 72% of S&P 500 companies who have reported their second quarter results so far have beaten analysts' earnings expectations. European stocks were largely unchanged with the DAX losing 0.02% while the FTSE gained 0.1%. In other news, China is about to announce a verdict in the sensational murder case of the wife of fallen Chinese political star Bo Xilai, after she failed to dispute the charges accusing her of the murder of a British businessman.
Commodities have recorded another lacklustre session without much impetus to drive price action and the CRB index closes 0.49 points higher at 304.81. WTI crude has consolidated at around $93.40 even as data indicates that countries are increasing stockpiles of strategic reserves at the highest rate in 14 years. Precious metals are largely unchanged with gold gaining 0.23% to $1,619 while silver is flat at $28.10. Soft commodities were mostly higher with wheat and soybean once again leading rises. Copper is steady.