World Daily Markets and Forex Bulletin

US Market
Stocks Turn Lower On Disappointing Housing Data

After seeing some early strength, stocks have shown a notable move to the downside over the course of morning trading on Thursday. The downturn came as disappointing housing data cooled trader optimism that was bolstered earlier by encouraging labor and manufacturing figures.

While the Commerce Department released a report on Thursday showing a modest increase in new home sales in the month of April, the sales growth came amid a notable downward revision to the pace of sales in March.

The report showed that new homes sales edged up 0.3 percent to an annual rate of 352,000 in April from a revised 351,000 in March. Economists had expected sales to rise to 360,000 from the 356,000 originally reported for the previous month.

Earlier, traders reacted positively to a report from the Labor Department that showed that initial jobless claims came in at 623,000 in the week ended May 23rd. This was down 13,000 from a revised mark of 636,000 in the previous week.

At the same time, continuing claims, which measure the number of people receiving ongoing unemployment help, rose once again and set another record high. The statistic climbed 110,000 to 6.788 million.

Separately, a report from the Commerce Department showed that orders for durable goods increased by much more than expected in the month of April, although the stronger than expected growth came after a steep decline in March.

The report said that durable goods orders jumped 1.9 percent in April following a downwardly revised 2.1 percent decrease in March. Economists had expected orders to edge up 0.5 percent compared to the 0.8 percent drop that had been reported for the previous month.

In other news, General Motors (GM) bondholders reportedly accepted an amended debt-for-equity offer that will help the auto giant restructure. The firm also said that a recent U.S. Treasury proposal provides incentives for GM's unsecured bondholders to support GM's restructuring efforts in the event GM decides to pursue a 363 sale as part of its likely bankruptcy proceeding.

The company said that the implementation of this proposal would result in a New GM with a healthy balance sheet, putting the new company on a clear path toward long-term viability and success.

Meanwhile, Time Warner Inc. (TWX) announced that its Board has authorized management to proceed with plans to spin off its AOL Internet business. Following the proposed transaction, AOL would be an independent, publicly traded company.

In recent trading, the major averages have moved well off their worst levels of the day, although they remain stuck in the red. The Dow is currently down 21.90 at 8,278.12, the Nasdaq is down 4.83 at 1,726.25 and the S&P 500 is down 0.93 at 892.13.

Sector News

Most of the major sectors have turned lower over the course of the morning, helping to drag the major averages into negative territory.

Housing stocks are leading the way lower, with the Philadelphia Housing Sector Index falling by 3.2 percent. With the decline, the index has dipped to its lowest intraday level in well over a month.

The retreat comes on the heels of the day’s disappointing housing data, which has renewed concerns about the near-term prospects for the embattled sector.

Electronic storage, healthcare and transportation stocks have also contributed to the pullback by the major averages on the day.

Mitigating some of the day’s losses are gains by resource stocks, with gold stocks posting notable gains and driving the Amex Gold Bugs Index up 3.9 percent. The advance by resource stocks comes amid an increase in most major commodities prices.

Other Markets

Stocks markets across the Asia-Pacific region turned in a mixed performance on Thursday, although the markets in Hong Kong and mainland China were closed. Japan's benchmark Nikkei 225 Index edged up 0.1 percent.

The major European markets are currently turning in a disappointing performance, deepening their losses. The French CAC 40 Index and the German DAX Index are down by 1.5 and 1.7 percent, respectively, while the U.K.'s FTSE 100 Index is down by 1.5 percent.

In the bond markets, treasuries have ceded some of their earlier gains but remain in firmly positive territory. Subsequently, the yield on the benchmark note is at 3.647 percent, a drop of 4.8 basis points on the day.

Asian Market
Mixed trading was witnessed among the major markets in the Asia Pacific region on Thursday, although the markets in Hong Kong, China and Taiwan were closed for public holidays. While the Australian, Malaysian and Singaporean markets ended in negative territory, while the markets in Japan, South Korea and Indonesia ended in positive territory

The Nikkei 225 Average opened weaker at 9,353, mirroring the losses on Wall Street. However, automakers helped stage a smart recovery in early trading, while a weaker yen and better than expected Japanese retail sales encouraged exporters. The index moved above the unchanged line in the afternoon session to the day's high of 9,493 before finally closing with a gain of 12.62 points or 0.13% at 9,451. The broader Topix Index of all first section issues ended at 896, up 2.74 points, or 0.3%.

On the economic front, the Ministry of Economy, Trade and Industry revealed that retail sales declined 2.9% year-over-year during April. Analysts expected sales to drop 3.3% during the month. The retail sales for March were revised to a negative 3.8% from the previously announced 3.9% decline

In South Korea, the benchmark KOSPI Index ended sharply higher as concerns about the threat from North Korea petered out and bargain hunting by institutional investors helped stocks across the board.

The Indian market continued its positive momentum despite mixed global cues. While short covering on account of derivatives contracts expiry pushed stocks considerably higher, the benchmark indexes pared some of their gains in late trading in reaction to the negative opening of the European markets. The BSE Sensex closed at 14,296, up 186.37 points or 1.32%, while the Nifty gained 61.05 points, or 1.42% to close at 4,337.

Among the other major markets in the region, Indonesia's Jakarta Composite Index edged up 10.03 points or 0.53% to close at 1,903, while the Strait Times Index in Singapore shed 13.11 points, or 0.57% to close at 2,293


European Markets and U.S. Economic Reports
The major European markets are trading lower on Thursday, with the French CAC 40 Index and the German DAX Index moving down 1.03% and 1.10%, respectively. The U.K.’s FTSE 100 Index is declining 1.19%.

Eurozone economic sentiment improved for the second straight month in May, a survey from the European Commission showed Thursday. The index rose to 69.3 in May from 67.2 in April. Economists expected a reading of 69. The increase in the confidence index was driven by a clear improvement in sentiment in the retail sector, which rose markedly to minus 15 from minus 20 in April. Confidence in industrial and services rose by 1 point each to minus 34 and minus 23, respectively. Meanwhile, consumer confidence remained unchanged at minus 31 in May.

A separate survey from the European Commission revealed that business confidence rose slightly to minus 3.17 in May from minus 3.26 last month. Economists were expecting a reading of minus 3.1.

Meanwhile, the German Federal Statistical Office reported that Germany’s jobless rate measured based on ILO standards rose to 7.7% in April from 7.4% in the same period last year. The unemployment rate came in line with economists’ expectation.

U.S. Economic Reports

The Commerce Department’s durable goods orders report showed that orders for goods designed to last for more than 3 years rose 1.9% in April to $161.5 billion following a 2.1% decline in March. Economists had looked forward to 0.5% growth in the durable goods orders.

Excluding transportation orders, new orders rose 0.8%. Transportation equipment orders jumped 5.4% to $40.5 billion. Shipments of durable goods were down 0.2% and unfilled orders declined 1.2%, while inventories also fell, dropping 0.8% in the month. The key non-defense capital goods orders, excluding aircraft, which is a measure of capital spending fell 1.5%

The U.S. Department of Labor revealed that initial jobless claims came in at 623,000 for the week ended May 23. This was down 13,000 from a revised mark of 636,000 in the previous week.

The 4-week moving average of initial claims, a statistic that flattens out week-to-week fluctuations in the data, dipped to 626,750 from the revised mark of 629,750 seen in the previous week.

Continuing claims, which measures the number of people receiving ongoing unemployment help, rose once again and set another record high. The statistic climbed 110,000 to 6.788 million.

The Commerce Department is also due to release its new home sales report for April at 10 AM ET. The consensus estimate calls for an increase in new homes sales to 360,000.

Crude oil inventories fell by 2.1 million barrels in the week ended May 15th to 368.5 million barrels. Even with the decline, stockpiles remained above the average range for this time of the year.

Gasoline inventories declined by 4.3 million barrels and were below the lower limit of the average range. On the other hand, distillate inventories rose by 1.8 million barrels and were above the upper limit of the average range. Refinery capacity utilization averaged 83.4% over the four weeks ended May 15th, lower than last week's 83.8%.