Consumer confidence is still poor and durable goods orders also reflect the continuing solid performance of the US export sector, as well as domestically. The Standard & Poor's 500 Index rose 5.22 points, or 0.4% on Friday; the Dow 21.41 to 11,370.69 and Nasdaq added 30.42, or 1.3%, to 2,310.53.
The S&P 500 cut its weekly retreat to just 0.2% for the week, the Dow lost 1.1%, but Nasdaq climbed 1.2%. The S&P 500 has risen 3.5% since July 15, but it is still down 14% this year and almost 20% from its October 9 record.
US new home sales eased 0.6% to an annual rate of 530,000, from an upwardly revised 533,000 in May. Economists had forecast a drop. The number of properties on the market dropped by the most in four decades, indicating builders are making some headway in clearing out inventories.
The Reuters/University of Michigan final index of consumer sentiment increased to 61.2 in July from 56.4 in June. Economists had forecast an unchanged reading of 56.4 in July. Oil fell to $US123.30 a barrel, a seven-week low. US shares rose, despite new figures showing that home foreclosure filings more than doubled in the second quarter from a year earlier.
According to RealtyTrac, one in every 171 US homeowners lost their house to foreclosure, received a default notice or was warned of a pending auction in the second quarter. That was up a huge 121% from a year earlier and 14% from the March quarter.
Friday also produced more bad news for US financials. Those rising foreclosures and a warning from S&P that it might cut certain of the ratings of Fannie Mae and Freddie Mac hit both struggling mortgage groups. The pair fell 3.9% to $US11.55 and 6.1% to $US8.27, respectively.
The financial sector as a whole lost 0.6%, and then the US banking regulators seized two small western banks after trading closed and sold them off. They were only small operations, a few billion in assets between them, but the move will remind the markets that banks remain stretched. Two weeks after the Federal Deposit Insurance Corp seized IndyMac of California; the Office of the Comptroller of the Currency said it closed First National Bank of Nevada and First Heritage Bank NA of California.
First National had total assets of $US3.4 billion and $3 billion in deposits while First Heritage had assets of $254 million and $233 million in deposits. The FDIC said the cost of the transactions to its insurance reserve is estimated to be $US862 million. The 28 offices of the two banks will reopen on Monday as Mutual of Omaha Bank.
Mutual of Omaha Bank currently has more than $US750 million in assets .It is a subsidiary of Mutual of Omaha, a 99-year-old insurance and financial services company with more than $US19 billion in total assets. European shares fell Friday for the third day this week on concerns about continuing losses in financial services.
The huge re-insurer, Munich Re (it's the world's second-biggest reinsurer) suffered the biggest fall in five years after it warned of "substantial'' write-downs on its equity investments and another German, re-insurer, Hannover Re also tumbled as it also warned that achieving forecast earnings this year will be much tougher.
That makes three German blue chips revealing earnings problems: earlier in the week Daimler warned that earnings would be off more than 10% in the 2009 year, despite higher revenue and a small rise in sales in the first quarter.
Despite those drops, the German market finished all but square on the day, but investors are wondering if big investors will now start reporting write-downs and losses, just as banks seem to be on the improve. The Dow Jones Stoxx 600 Index fell 0.2% on Friday, trimming the week's gain to 0.4%. Those surprise US durable goods orders helped European market sentiment.
National indexes slipped in all 18 western European markets except France and Sweden. Germany's DAX slipped less than 0.1%, while the UK's FTSE fell 0.2% and France's CAC 40 rose 0.7%. Most German stocks though rose, sending the benchmark DAX Index to its second straight weekly gain, finishing up 0.9% overall. The London market ended the week down 04% overall.
Asian markets had their best week in two months last week, despite the shock administered by the National Australia Bank's $830 million write down on some of its collaterallised debt obligations. The failure by Samsung Electronic to reach profit forecasts also hurt on Friday, as did the highest inflation figures in Japan for more than a decade on Friday at 1.9% annual in June.
The MSCI Asia Pacific Index rose 3.0% last week, the biggest weekly advance since May 16. Japan's Nikkei ended its six week losing run by finishing up 4.2%. All other Asian benchmark indexes rose.
The MSCI Asian index had risen 5.9% up to the close of trading on Friday, but Friday's spate of bad news and the reaction to Wall Street's big slide overnight Thursday saw the index lose 2.5% on the day. In Japan the inflation figures were worse than forecast. Surging energy and food prices had a bigger impact than forecast.
Corporate goods prices jumped 5.6% in the year to June, according to the Bank of Japan. Those figures seem to suggest that companies had cut profit margins because they were unable to full pass on their higher costs to all customers. Japan's core consumer price index, which excludes fresh food, increased at an annual rate of 1.9% in June, compared to 1.5% annual in May. It was the most since late 1992 excluding a one-off spike when consumption tax was increased in 1997.
The news came two days after Japanese exports surprising fell 1.7% in June, led by a 15% slump in exports to the US and lower shipments to Europe and slowing shipments to Asia. In Australia the NAB's shock news forced shares down by the most since the dark days of January.
Easing commodity prices also saw the likes of BHP and Rio Tinto lose more ground. The NAB dropped by almost 14% after revealing the write-down of $830 million on its off balance sheet investment in collateralised debt obligations.
The ASX 200 fell 173.60, or 3.4%. The drop was the biggest since January 22 and extended Index's loss this year to 22%. The All Rods finished down 157.4 points. But the overall market finished the week up around 2.3% because of good gains earlier on.
The NAB fell 14% to $26.56 and the ANZ slumped 8.7% to $17.75.
BHP eased 1.7% to $36.92 as gold, copper and oil all eased over the week. Nickel dropped sharply in London.
Stock land, the largest housing developer in the country, plunged 60c, or 11%, to $5.03 after its rating was cut to "hold'' from "buy'' by analysts at Citigroup.
Hong Kong shares dropped 1.5% on Friday, but the main index rose 4% over the week, posting its best weekly gain in three months.
