Canada’s main stock index rose yesterday as shares of gold miners rallied on increased optimism about the outlook for the industry and the price of bullion as prices held near $1,000 an ounce. The gain in gold miners helped lift the materials sector by 1.92%, the biggest gain among the 10 sectors. Within the index, 9 out of the 10 sectors advanced on the day. The S&P/TSX composite index finished the session up 0.5%. It was the 2nd daily gain after the index hit a 2 week low last Friday. The influential energy sector was held back as oil prices dropped slightly as the U.S. government lowered its estimate for July oil demand. Data showed consumer confidence in Canada improved for the 7th straight month in September.
In the United States stocks fell as a surprise drop in a gauge of consumer confidence overshadowed signs of stabilization in housing and solid earnings from Walgreen, a major pharmacy chain in the United States. In addition to this, after the bell, Nike posted a quarterly profit that beat Wall Street’s forecasts sending the stock up after hours. An improved S&P/Case-Shiller home price index reading that hinted at stabilization in the housing market. Initially stocks did start the day higher but then turned lower as the Conference Board’s Consumer Confidence Index for September fell, underscoring concerns about personal finances amid the worst job market in 26 years in the United States.
The Dow Jones industrial average dropped by 0.48%, the Standard & Poor’s 500 Index dropped by 0.22% and the Nasdaq Composite Index dropped by 0.31%. The S&P 500 is up 15.4% so far in the 3rd quarter which ends today, making a run for its best quarterly performance since the 4th quarter of 1998 — this is also true for global stocks. The benchmark index has rallied more than 50% from the 12-year low of March 9th of this year.
The S&P/Case-Shiller composite index of house prices rose for a 3rd month. “These figures continue to support an indication of stabilization in national real estate values, but we do need to be cautious in coming months to assess whether the housing market will weather the expiration of the Federal 1st time Buyer’s Tax Credit in November, anticipated higher unemployment rates and a possible increase in foreclosures,” David Blitzer, chairman of the index committee said.
In July, expected consumer confidence in the United States remained weak, the data indicates the economic rebound is still in its early days following the worst recession in decades, and it could be a long time before consumers contribute to global economic growth. The Conference Board, an industry group, said its index of consumer attitudes fell to 53.1 in September, versus 54.5 in August and expectations of a rise to 57.0. “While not as pessimistic as earlier this year, consumers remain quite apprehensive about the short-term outlook and their incomes,” said Lynn Franco, director of the Conference Board Consumer Research Center. Housing was at the center of the financial crisis that pushed last year’s mild recession into deep a downturn, and massive foreclosures have pressured consumers.
Stocks rallied worldwide this morning and S&P 500 futures are up, with Europe’s benchmark index posting the best quarterly advance since the 4th quarter of 1999, as Chinese manufacturing expanded and the International Monetary Fund (IMF) cut its estimate of bank write downs. Commodities are up and the $US dollar is down (more than 1%). The MSCI World Index has advanced 18% (local currency) in the past 3 months after the Group of 20 nations committed $12 trillion to revive global growth and countries from Germany and France to Hong Kong and New Zealand exited recessions.
