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Wednesday, April 20, 2016
Markets fluctuate on earnings and oil
Dow crawled up 4, advancers barely ahead of decliners & NAZ added 6. The MLP index went 1 to go over 290 & the REIT index fell back 2+ to the 339s. Junk bond funds edged higher & Treasuries had a slight gain. Oil pulled back (see below) & gold was flattish.
China's stocks sank the most in almost 2 months, pushing a gauge of
volatility up from its lowest level this year as turnover surged. The
Shanghai Composite Index dropped 4.5% before paring declines to 2.3%. Industrial & technology companies led losses, while 13 stocks
fell for each that rose. The Hang Seng China Enterprises Index retreated
from a 3-month high in Hong Kong. Traders struggled to
explain the reason. Interest in
mainland equities has been fading this month after the Mar 12%
surge amid concern that improving economic data will prevent the
gov from adding stimulus.
The
Shanghai Composite closed at 2972, falling below the key 3K level
for the first time since Apr 8, & taking its loss this year to 16%. The ChiNext index for small caps plunged 5.6% & the Hang
Seng China Enterprises slid 1.2%, while the Hang Seng Index
dropped 0.9%. China's
central bank is signaling less of an appetite for adding monetary
stimulus following evidence of an acceleration in growth. The People's Bank
of China said that
future policy operations, while observing the need to continue
supporting growth, will also pay attention to heading off macroeconomic
risks, especially an over-expansion of corp leverage.
Oil fell after Kuwait workers said they would end a strike that
disrupted output from OPEC's 4th-largest producer for 3 days. Futures fell 3% after gained 3.3% yesterday. That was the first advance in 5 days, after the protest reduced Kuwait's production 1.7M barrels a
day. US inventories probably increased by 3M barrels last week.
Kuwait’s workers will resumed their jobs today out of respect for the country's emir after successfully
showing the importance of their role in the economy. The country
will boost output to an average of 3M barrels a day in 3
days.
Purchases of previously owned US homes rose more than projected in
Mar, indicating resilience in demand heading into the spring selling
season. Contract closings climbed 5.1% to a 5.33M annualized
rate from Feb's 5.07M, figures from the National Association
of Realtors. The forecast called for a rise to 5.28M.
Prices rose as inventories remained tight. The report underscores the role that strong hiring & low borrowing
costs are playing in supporting housing at a time the economy is
restrained by fragile manufacturing & weak global markets. Faster wage
growth & more participation from first-time homebuyers would help
usher further gains in sales. Compared with a year earlier, existing-house purchases increased 1.5% in seasonally-adjusted data. The median price of an existing home rose 5.7% from Mar 2015 to reach $222K. While rising property values allow
homeowners to feel wealthier & make it easier for them to sell their
dwellings, the price gains limit affordability for prospective buyers. There were 1.98M houses on the market at the end of Mar,
down 1.5% from the same month last year. At the current sales pace, it would take 4.5 months to sell those
houses compared with 4.4 months at the end of the prior month. Less than
a 5 month supply is considered a tight market. The median time a home was on the market decreased to 47 days from 52 days a year earlier. Sales of existing single-family homes increased 5.5% to an
annual rate of 4.76M. Purchases of multifamily properties climbed 1.8% to a 570K pace. First-time buyers accounted for 30%
of all purchases, which remains a historically low share.
...1.09 
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