On 24 May, 2016 – New US home sales soar

Stocks in Asia were mostly lower but those in the US and Europe rebounded from yesterday’s losses.
United States
US stocks followed those in Europe higher with technology companies making sturdy gains. The Dow Jones industrials were up 1.2 percent, the S&P gained 1.4 percent and the Nasdaq added 2.0 percent.
Tech stocks Apple, Alphabet and Microsoft advanced. Monsanto was up after it rejected Bayer’s $62 billion takeover offer Tuesday, calling the bid too low. But Monsanto, the top producer of genetically modified crop seeds, said it was “open to continued and constructive conversations” about a potential merger of the two. Fertilizer maker CF Industries ended a deal to buy OCI’s distribution networks for about $8 billion. CF planned to reincorporate in Britain as part of the deal, which would have reduced its tax bill, but the company said new Treasury Department rules made the combination less appealing.
Toll Brothers gained after it reported better first quarter results than expected. The company increased its annual projections for home prices and sales. Shares of other home builders also climbed after April sales of new homes reached their highest level in eight years. Beazer Homes USA and PulteGroup rallied. Other housing related stocks including Whirlpool and Mohawk Industries also advanced.
Netflix rose after it said it had struck a deal with Disney beginning in September. Netflix will have exclusive United States rights to new movies from Disney, Marvel, Lucasfilm and Pixar. Best Buy retreated after it said its quarterly sales kept falling and its outlook was weak. DSW was down after it reported disappointing results in the first quarter. The company cut its outlook, saying it expected weaker sales this year.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$9.05 to US$1,236.85. Copper futures were up 0.5 percent to US$2.07. WTI spot crude was up 69 US cents to US$48.77. Dated Brent spot crude was up 0.43 US cents to US$48.78. The US dollar was up against the euro, yen, Swiss franc and the Australian dollar. However, it declined against the pound. The US currency was virtually unchanged against the Canadian dollar. The Dollar Index was up 0.5 percent. The yield on US Treasury 30 year bond was up 1 basis point to 2.64 percent while the yield on the 10 year note was up 3 basis points to 1.86 percent.
Europe
Shares rebounded following yesterday’s declines. Among the reasons for the rally were the latest polls showing increased support for the UK to remain a member of the European Union. Financial stocks gained as did exporters with the latter benefitting from a weakening euro against the US dollar. The FTSE was up 1.3 percent, the CAC advanced 2.5 percent, the DAX added 2.2 percent and the SMI was 1.1 percent higher.
Banks in Germany and France including Commerzbank, Deutsche Bank, Société Générale, BNP Paribas and Crédit Agricole advanced. Automakers Volkswagen, Daimler, BMW, Renault and Peugeot gained. Kingfisher climbed after the company reported first quarter total Group sales of £2.72 billion, an increase of 5.1 percent from the prior year. Severn Trent gained after it reported profit before tax of £322.3 million for the year to 31 March 2016 compared to £148.2 million in the previous year. In London the Royal Bank of Scotland, Barclays, Standard Chartered, Lloyds Banking Group and HSBC all closed higher. Old Mutual rallied after confirming that it had received multiple approaches from potential buyers of its stake in the US fund firm Old Mutual Asset Management. Imperial Brands shares were up on a broker upgrade.
The ZEW Indicator of Economic Sentiment for Germany dropped to 6.4 from 11.2 in April, declining for the first time since February. Financial experts thought that it was unlikely that Germany would repeat its first quarter performance thanks to the uncertainty linked to “Brexit”. First quarter gross domestic product climbed 0.7 percent on the quarter.
Asia Pacific
Stocks were mostly lower Tuesday. Investors continued to worry about the potential for an interest rate increase in the US as soon as mid-June. Weak commodity prices also weighed on resources stocks. The Shanghai Composite was down 0.8 percent while the Hang Seng added 0.1 percent.
The Nikkei retreated 0.9 percent in thin trading as a stronger yen dragged down exporters’ shares. Investors were looking ahead to the Group of Seven summit starting in Japan on Thursday. Toyota, Inpex and market Fast Retailing declined along with Kubota.
Both the S&P/ASX and All Ordinaries were down 0.4 percent after the Reserve Bank of Australia’s Governor Glenn Stevens defended the Bank’s inflation target range of between 2 and 3 percent. In addition, weak iron ore and crude oil prices weighed on resources stocks. BHP Billiton and Rio Tinto advanced while Fortescue Metals and Santos retreated. The four big banks also declined. The Kospi declined 0.9 percent to a three month low. Investors continued to worry about another US interest rate increase. The Sensex added 0.3 percent.
Global Stock Markets

Please remember, the value of investments and the income from them can do down as well as up. Funds that invest in overseas markets may be subject to currency fluctuations. Investments in small and emerging markets can be more volatile than other overseas markets. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only.
Looking forward*
Germany posts revised first quarter gross domestic product and May ZEW survey. In the US, goods trade for April will be released as will FHFA house prices.
*Note — all releases are listed in local time.

Source: Fidelity

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