EUROPEAN CLOSING THOUGHTS 19/09/12

US Housing data gave a boost to European markets. The Stoxx50 rose 0.40% to 2,563.53, the German Dax rose 0.53% to 7,386.53, in Southern Europe: Spanish Ibex rose 0.38% to 8,088.90 and the Italian Ftsemib turned green, up 0.02% to 16,078.65. Investors were whipsawed today by the housing data, with good news from one indicator followed by disappointment from the next. First, the housing starts data were a mild disappointment, then the existing-home sales came in better than expected.The number of new houses being built rose slightly in August to a 750,000 seasonally adjusted annual rate, the Commerce Department estimated Wednesday. Housing starts data disappointed investors, who were expecting a larger increase to about 775,000, based on the strides seen in the separate home-builders' index over the past several months. On the other hand, the National Association of Realtors said sales rose 7.8% in August to seasonally adjusted annual rate of 4.82 million, better than the 4.6 million expected by economists polled by MarketWatch. The question to answer at this point is: Is the housing market strong enough to carry the whole economy all by itself? US markets for the moment behaved as if the answer is Yes: the Dow Jones Industrial Average traded 0.34% higher to 13,610.33, the S&P500 rose 0.28% to 1,463.46 while the Nasdaq was lagging at 3,179.81 or 0.06% higher. The Oil sector weighted on the overall market performance,as Crude oil futures dropped further today, losing more than 3%, after a government report showed a larger than expected supply increase. Crude for October delivery lost $3.14, or 3.3%, to $92.17 a barrel on New York Mercantile Exchange. A close at these levels would be oil's lowest in more than six weeks. Oil traded at $92.98 a barrel before the inventories data. The dollar also lost steam, however. The ICE dollar index, which measures the U.S. unit against a basket of six major global currencies, recently was at 79.068, down from 79.226 in North American trading late Tuesday. The common currency gained 0.23% versus the greenback trading at 1.3079$ at European cash close. The precious metal was able to keep early gains due to the BoJ's move, Gold for December delivery rose 0.18% to 1,774.00 in Comex trading. It's worth to remember that investors have recently pushed gold higher on the view that it works as an inflation hedge against that stimulus and potential devaluation of currencies. Today was a good day to learn something, you could easily have been whipsawed by the moves, but if you were flexible enough you could have taken profits from at least one side of the market. Everyday the market offer a lesson to learn. Have a great evening.