Further weak US economic data has cast a dark cloud over global financial markets once again this afternoon.
Following yesterday's data showing existing US home sales had fallen to a 15-year low, the latest information for new home sales has failed to alleviate the current gloom. July's figures showed that annual sales fell by a sharper-than-expected 12.4% year-on-year, the slowest monthly rate since data was first recorded nearly 50 years ago. [1]
The weak data, analysts had expected a flat month after June's 12% jump, has led to renewed fears for a return to negative growth: 'The odds of the dreaded double-dip are increasing', claimed one US economist. [2]
Durable goods orders for July also disappointed. The rise of 0.3% which was reported fell well below consensus expectations for a 1.6% jump, spreading further dismay among traders. [3]
Standard & Poor's downgrading of Ireland's credit rating has served only to put another dampener on sentiment. The ratings agency cut the rating from AA to AA- over fears that the country's beleaguered banking sector is weighing heavily on the Irish government.
It wasn't quite all doom and gloom though, after Hewlett Packard announced it is to create 700 jobs at its plant near Glasgow. The IT technology company will receive up to £7 million after working in collaboration with Scottish Development International and Scottish Enterprise towards the deal. [4]
At 4.30pm (London time) the Dow Jones had recouped earlier falls which had seen the index plunge back below the 10,000 level, and stood at 10031.52, just 8.93 points down on its starting level.
The Nasdaq had also crept into the black, up 2.46 points to 2126.22. Heading the fallers on the Dow in early trading were banks JP Morgan Chase (-1.05%) and Bank of America (-0.86%), while the top end of the leader board was occupied by Home Depot (+1.91%) and Intel (+0.57%).
Looking ahead, tomorrow's data is relatively thin on the ground, but investors will be closely monitoring the UK's distributive trades’ survey and of course US weekly jobs data for the very latest outlook on what appears to be increasingly shaky economic ground.
Additionally, a number of UK firms are reporting tomorrow. Look out for annual numbers from drinks giant Diageo and half-year figures from miner Kazakhmys.
Source: [1] [2] [4] BBC News (25 August 2010)
Source: [3] Financial Times (25 August 2010)
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'Spread Betting News 25 Aug 2010', Article by IG Index, last update: 25-Aug-10
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