In a relatively quiet day for policy decisions and high impact news events the main USA markets opened up sharply then sold off just as sharply, to then recover much of the early gains in tandem with the news from the Ukraine and the sanctions imposed on individual Russian targets. In other news pending home sales rose in the USA by an amount that took the analyst community off guard given that the expectation was for a 1% rise and not the 3.4% rise witnessed in March.
Pending Home Sales Increase in March
After months of stagnant activity, pending home sales rose in March, marking the first gain in the past nine months, according to the National Association of Realtors®. The Pending Home Sales Index a forward-looking indicator based on contract signings, rose 3.4 percent to 97.4 from an upwardly revised 94.2 in February, but is 7.9 percent below March 2013 when it was 105.7. Lawrence Yun, NAR chief economist, said a gain was inevitable. [quote]After a dismal winter, more buyers got an opportunity to look at homes last month and are beginning to make contract offers. Sales activity is expected to steadily pick up as inventory increases.[/quote]
U.S. sanctions Russians over Ukraine
The United States froze assets and imposed visa bans on seven powerful Russians close to President Vladimir Putin on Monday and also sanctioned 17 companies in reprisal for Moscow’s actions in Ukraine. President Barack Obama said the moves, which add to measures taken when Russia annexed Crimea last month, were to stop Putin cementing rebellion in eastern Ukraine. Obama added he was holding broader measures against Russia’s economy “in reserve”. Among those sanctioned were Igor Sechin, head of state energy firm Rosneft, and Deputy Prime Minister Dmitry Kozak.
Market overview at 10:00 PM UK time
The DJIA closed up 0.53%, the SPX up 0.32% and the NASDAQ down 0.03%. Euro STOXX closed up 0.59%, CAC up 0.38%, DAX up 0.48% and the UK FTSE up 0.22%.
The DJIA equity index future is up 0.45%, SPX future is up 0.32% and the NASDAQ future is up 0.35%. The euro STOXX future is up 0.42%, DAX future is up 0.35%, CAC future up 0.38% and the UK FTSE future is up 0.24%.
NYMEX WTI oil finished the day up 0.29% at $100.89 per barrel, NYMEX nat gas finished the day up 3.18% at $4.80 per therm. COMEX gold closed the day down 0.38% at $1295.90 per ounce with silver down 0.60% at $19.60 per ounce.
Forex focus
The yen dropped for the first time in five days against the dollar, losing 0.3 percent to 102.49. It fell 0.5 percent to 141.96 per euro. The greenback slipped 0.1 percent to $1.3851 per euro. Emerging-market currencies rose the most in more than a week as an easing of tensions in Ukraine drives investors’ demand for higher-yielding assets.
The pound rose as much as 0.3 percent, the biggest increase since April 16th, to $1.6858, the highest level since November 2009, before trading little changed at $1.6807. Sterling strengthened the most in almost two weeks against the U.S. dollar before data tomorrow that economists said will show gross domestic product increased at the fastest pace since 2010 in the first quarter. Pfizer Inc. said it’s interested in a deal to buy AstraZeneca Plc (AZN), Britain’s second-biggest drug-maker.
The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, was little changed at 1,010.89 after falling to 1,009.17, the lowest since April 17th.
Bonds briefing
Benchmark 10-year yields climbed four basis points, or 0.04 percentage point, to 2.70 percent at 5 p.m. in New York, the first rise in six days. The 2.75 percent note due in February 2024 fell 10/32, or $3.13 per $1,000 face amount, to 100 13/32. While the 10-yield was more than a full percentage point from the record-low 1.379 percent reached in July 2012, it was still below its 10-year average of 3.45 percent. Thirty-year bond yields rose four basis points to 3.49 percent. The yield dropped to 3.42 percent on April 25th, the lowest level since July 3rd.
Treasuries fell for the first time in a week before Federal Reserve policy makers begin a two-day meeting tomorrow at which they are forecast find enough economic improvement to further scale back stimulative bond purchases.
Fundamental policy decisions and high impact news events for April 29th
Tuesday sees the latest German GFK business climate reading published, expected to come in at no change at 8.5. Spanish unemployment is expected to have fallen slightly at 25.6%. Germany’s preliminary CPI is expected to come in at -0.1%, preliminary GDP for the UK is expected to come in at 0.9% for the quarter. The index of services for the UK is also expected in at 0.9%. An Italian ten year bond auction takes place in the afternoon as does a UK ten year bond auction. From the USA in the afternoon we receive the latest house price inflation data expected to come in at 12.9%. The CB Consumer confidence survey is published in the afternoon session with the print predicted to come in at 82.9. Later the Canadian central bank governor Poloz speaks. In the evening the New Zealand monthly building consents number is published.
