Better than expected US housing figures have given a lift to a Wall Street that was being undermined by continuing fears about the European debt crisis.
With the weekend's bailout of a regional Spanish bank, the worries about Greece's financial problems spreading elsewhere re-emerged. So the Dow Jones Industrial Average fell around 100 points in early trading, making investors elsewhere jittery. But with sales of previously owned US homes rising to a five month high in April, the Dow has regained some poise and is now down less than 40 points. The FTSE 100 has, as a consequence, edged up 8.05 points to 5070.98. Rob Carnell at ING Bank said:
Strong US April existing home sales (5.77m at annualised rate, up from 5.36m in March) are another encouraging sign from the US. But like so much else, this could simply be a reflection of policy stimulus. April marks the last month to qualify for home buyer tax credits, with some scope for current deals in the pipeline to qualify if they are concluded by June. So the real question is how much such stimuli are responsible for current housing market strength. And how much underlying momentum exists in housing sales adjusting for this stimulus? We should know in a month or two.
Meantime, the apparent strengthening of the housing market is encouraging marginal sellers to re-enter the market.
