Wall Street was up, as were technology stocks, even if the sluggish economy means lower sales of gizmos. Investment analysts reckon some tech stocks are a buy. Gold and copper fell, soybeans jumped on supply worries from Argentina. Tuesday saw a $US4 a barrel drop in oil prices to just over $US128 in late New York trading followed a bounce in the value of the greenback against the euro. Wednesday saw that fall clawed back as oil prices regained $US130 a barrel on new broker forecasts of $US150 a barrel oil this year.
And the uS dollar was firmer, as was the Australian dollar which remained over 96 US cents. New home sales were better than forecast for April, but the markets ignored the accelerating slide in US house prices. In fact Wall Street was indifferent to the record fall in US house prices in the first three months of this year compared with the first quarter of 2007.
The Standard &Poor's/Case-Shiller national house price index, which covers about three-quarters of the country, was 14.1% lower in the first quarter of 2008 than for the same period a year earlier, the sharpest drop in the 20-year history of the index. There was a slowing in the pace of the decline: the 10-city index fell 2.4% in March, compared with 2.8% in February and the 20-city index dropped 2.2% against a 2.6% fall, but the indices have fallen a record 15.3% and 14.4% respectively over the 12 months to the end of March.
Put it this way, a few years ago an annual fall of 2.2% to 2.4% would have been considered a shock and major surprise, let alone in a month, but for house prices to be down more than 14% in a year is unheard of. But that was too gruesome for investors who preferred to look for silver linings in new home sales (forgetting that they cover less than 15% of all home sales).
New home sales rose 3.3% in April to a rate of 526,000 after March's original 8.5% fall was increased to a drop of 11%. What chances are there for the April rise being scaled back then with that size of revision? New home sales have plunged 42% in the past year, the biggest fall in 27 years. You can bet that this small rise is not behind the sharp fall in US consumer confidence this month: it was in fact higher oil and petrol prices, higher food costs and the remorseless slide in house prices that saw US consumer confidence fall to the lowest level since 1992.
