Markets Consolidate as Stocks Recovered after Initial Selloff
Risk selloff post poor US durables and home sales data was rather brief. DOW once dived sharply to as low as 9937 in early trading but had indeed turned positive in closing. Strong support is still seen around 10000 level. Dollar and yen were largely in range in spite of some intraday volatility. The greenback was still feeling pressure from strength in gold, which extended yesterday’s strong rise through 1240 level. Meanwhile, yen retreated on renewed talk on possible intervention from Japan.
US new home sales dropped sharply by -12.4% in July to annualized rate of 276k, the worst reading since 1963 and way off expectation of 330k. Headline durable goods orders rose a mere 0.3% in July comparing to 3.0% expectation. Ex-transport orders are even worse and dropped -3.8%. The poor data again raised concern that US economy could re-enter into recession.