While you were sleeping: Housing gains, HP slumps

Ben Bernanke: Uncertainties abound

Wall Street welcomed another surprisingly upbeat sign on the American housing market, the second in as many days.

However, shares of Hewlett-Packard slumped 11% after the company announced an $US8.8 billion charge in large part because of "accounting irregularities" at Autonomy Corp, a software company it acquired last year.

Building on yesterday's report showing that US homebuilder sentiment climbed to the highest level in six years in November, Commerce Department data today showed that housing starts posted a surprise 3.6% increase in October, reaching the highest level in four years.

Construction began on 894,000 homes at an annual rate after an 863,000 pace in September, compared with economists' forecasts in a Bloomberg survey for 840,000 starts.

"The broad improvement in home prices, home equity, starts and inventory clearing are key developments that position the economy for stronger growth next year and beyond," Eric Green, chief economist at TD Securities in New York, told Reuters.

Federal Reserve chairman Ben Bernanke today called the gains in home sales, prices, and construction since early this year "encouraging". At the same time, however, he also warned that "the recovery in the housing sector is likely to remain moderate by historical standards".

He made the comments in a speech in New York, reminding investors that there is a lot at stake for the US economy in the talks to avoid the fiscal cliff, and that a successful agreement would provide a boon to growth.

"Currently, uncertainties about the situation in Europe and especially about the prospects for federal fiscal policy seem to be weighing on the spending decisions of households and businesses as well as on financial conditions," Mr Bernanke said.

"Such uncertainties will only be increased by discord and delay. In contrast, co-operation and creativity to deliver fiscal clarity-in particular, a plan for resolving the nation's longer-term budgetary issues without harming the recovery-could help make the new year a very good one for the American economy." 

In afternoon trading in New York, the Dow Jones Industrial Average dipped 0.10%, while the Nasdaq Composite Index slipped 0.07%. The Standard & Poor's 500 Index rose 0.10%.

In Europe, the Stoxx 600 Index finished the day with a 0.3% gain on the previous close. Stocks also advanced in Frankfurt and London. And Paris, too, even as Moody's Investors Service downgraded France's sovereign credit rating by one notch to Aa1 after the market's close on Monday.

Among the gainers were shares of Xstrata and Glencore International, rising 3.1% and 1.6% in London respectively, after investors approved their $US31 billion merger.

Meanwhile, European finance ministers are meeting in Brussels today to discuss ways to fill a 15 billion euro gap in Greece's public accounts. The options under consideration include recycling ECB profits on Greek bonds, charging Greece lower interest rates and extending repayment deadlines, according to Bloomberg News.

(BusinessDesk)

This article is tagged with the following keywords. Find out more about My Tags

Comment & Question

Commenter icon key: Subscriber Verified

Post New comment or question

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

NZ Market Snapshot

Forex

Sym Price Change
USD 0.7815 -0.0016 -0.20%
AUD 0.9149 0.0001 0.01%
EUR 0.6263 -0.0013 -0.21%
GBP 0.4973 -0.0009 -0.18%
HKD 6.0612 -0.0118 -0.19%
JPY 91.9670 -0.2910 -0.32%

Commods

Commodity Price Change Time
Gold Index 1197.1 1.400 2014-11-25T00:
Oil Brent 80.2 1.630 2014-11-24T00:
Oil Nymex 74.1 -1.660 2014-11-25T00:
Silver Index 16.6 0.170 2014-11-25T00:

Indices

Symbol Open High Last %
NZX 50 5442.7 5465.6 5442.7 0.36%
NASDAQ 4762.4 4774.5 4754.9 0.07%
DAX 9790.0 9921.5 9785.5 0.77%
DJI 17819.1 17854.7 17817.9 -0.02%
FTSE 6729.8 6750.9 6729.8 0.02%
HKSE 23833.2 23899.8 23843.9 0.19%
NI225 17348.0 17392.8 17407.6 -0.28%