Daily Market Reports | Dec 23 2010
By Greg Peel
The Dow rose 26 points or 0.2% while the S&P gained 0.3% to 1258 and the Nasdaq added 0.2%.
Back in October the measure of US pending home sales posted its biggest ever monthly jump in rising 10%. It takes about a month or so for the pending data to convert to actual data, and so high hopes were held for last night's release of November existing home sales numbers.
Existing home sales jumped 5.6% which was…well…quite good, but not quite as good as the 10% pending number had predicted. The FHFA house price index rose 0.4% which was…you know…okay, but existing home sales are still down around 30% year-on-year and 33% of November sales were from “distressed” sellers. That's still not the stuff of clearly pending recovery.
There were also high hopes held for the final revision of third quarter GDP. To recap, the first estimate takes July numbers and extrapolates for the quarter, the first revision takes July and August, and then the final revision adds in September for the “real” result. The first revision had growth at 2.5%, but consensus had been for the final revision to show 2.8%.
The result of 2.6% was thus a disappointment but…hey…2.6% is still better than 2.5%.
So there's a bit of this ho-hum sort of attitude going around. We know QE2's sitting there, but maybe we've pushed the market a little high in the short term given we're now back above Lehman levels. Maybe we need a shake-up before we push on in 2011? Or maybe we all just need a break. Perhaps December ennui has set in. Cue Little Orphan Annie.
There was a similar feeling across the pond in Britain last night when the UK third quarter GDP was actually revised down, from 0.8% growth to 0.7%. Moreover, the minutes of the December Bank of England meeting showed that the committee remains split three ways on monetary policy – status quo; introduce QE2; raise the cash rate.
When those of wisdom charged with the task of driving the economic ship are polarised, it doesn't do much for one's confidence. Thank God for Wilkat.
The subsequent slip in the pound last night had the US dollar index holding steady at 80.67, but we have parity once more – just. The Aussie is sitting at US$1.0003. Gold fell US$1.80 to US$1383.60/oz.
Oil cracked the US$90 mark last night in the new front month contract, rising US72c to US$90.54/bbl and largely a response to the big northern freeze. While this is encouraging for oil investors, consensus has oil reaching triple digits soon so once again there are concerns about the subsequent drag on growth. The cost of oil is, after all, effectively a tax.
Base metals had a quiet and mostly steady night in London. The US ten-year yield regained the 4 basis points lost on Tuesday to 3.34%.
The SPI Overnight was up 17 points or 0.4%.
There are four significant monthly data releases in the US tonight but the tumbleweeds will also start to roll through the NYSE from lunch time as the exodus to the airport begins. Wall Street is closed on Friday, and for some reason North American airports know how to deal with snow while European airports shut down at the first flake.
Rudi will make his final appearance for 2010 on Lunch Money today at noon on the Sky Business channel.
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