Morning Market Update Sept 26: Instability in Italy, Mixed US Economic Numbers

September 26th, 2013 by

Gold is near steady around the $1,335 mark after worse than expected existing home sales reversed pressure from a fall in first-time jobless claims.

Gold had held between $1.300 and $1,335 overnight, with two small spikes in Europe over political upheaval in Italy. Early morning prices in New York were pressured when U.S. first-time jobless claims for last week were reported to have fallen by 5,000 to 305,000 newly-fired workers. the four-week rolling average fell 7,000 to 308,000 first-time claims – the lowest since July 2007. This is seen as good news, as companies slow downsizing. It is also seen as increasing chances of the Fed tapering their massive bond-buying program, credited for the bull market in stocks and real estate.

Things actually aren’t so rosy on the real estate front, though, as pending sales of existing homes fell 1.7% in August- the third straight month of declines, and worse than the expected 1% drop. Mortgage rates are still near two-year highs, stifling demand for homes.

Wall St. opened higher, trying to notch the first day of gains after a five-days of losses. the dollar is slightly higher as the euro and yen weaken slightly, but any upside to the greenback is tempered by fears of a government shutdown as a dysfunctional Congress attempts to pass a budget and an increase to the debt ceiling at the same time.

Europe is unsettled by a report of a decline in commercial lending, as well as threats in Italy by Silvio Berlusconi’s right-wing party to bring down the government if their leader is forced to give up his Senate seat over his felony tax fraud conviction. Italian stocks and bonds both took a drubbing, as Italian president Napolitano publicly called out Berlusconi over his threats.

In Asia, the Nikkei snapped a 3-day losing streak to finish up 1.2% as rumors grew over a federal tax cut. Wal-Mart’s announcement yesterday that it was cutting orders to its suppliers for the next six months, due to a backlog of unsold merchandise amid sagging sales hit Chinese stocks hard. The Shanghai exchange was down 1.94% to two-week lows, and the Hang Seng in Hong Kong dropped -.36%. China announced reforms in consumer credit today, in an attempt to facilitate domestic spending.


by David Peterson