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US falling home values brings uncertainty to markets

Tuesday, March 27th 2007 - 21:00 UTC
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Increasing uncertaintiy makerts Increasing uncertaintiy makerts

United States falling home values, poor consumer confidence and rising fuel prices knocked Tuesday Wall Street and Latinamerican stock markets. The New York-based Conference Board index for March fell to 107.2 from 111.2 a month earlier.

The compilers of the index said "apprehension about the short-term future" had dented confidence. Investors reacted to the data and other news with the Dow Jones index closing down by more than 70 points. "The recent turmoil in financial markets coupled with the run-up in gasoline prices may have contributed to consumers' heightened sense of uncertainty and concern," said Lynn Franco, director of the Conference Board Consumer Research Center. "The direction of both components over the next few months bears watching to determine whether this decline is just a bump in the road or something more substantial." Also worrying economists is the US housing market, with a report on Tuesday by Standard & Poor's showing that prices of single-family homes across the US fell in January from year ago. This came after Commerce Department data on Monday showing that the number of new homes sold fell 3.9% in February, after January's 15.8% drop. There are concerns that a decline in house prices will bring more weakness to the et, causing people to rein in spending because they feel less wealthy. Furthermore one of the biggest homebuilders, Lennar, said it would miss profits targets for 2007 and announcing its first quarter profits was down 73%. On Wall Street, the Dow Jones index closed down 71 points, 0.57% to 12,397.3 while the Nasdaq lost 0.74% to 2,437.43 points. In Latinamerica Mexico, Brazil, Chile and Argentina lost closed down between 0.12 and 0.96%. US stocks have also been particularly hit by concerns over the US sub-prime mortgage market, with figures showing that late mortgage payments and home repossessions in the US are at their highest level since records began. The ongoing Iran clash with the United Nations and the recent abduction of members from the Royal Navy by Iranian troops has again pushed oil prices to one of its highest levels so far in 2007. Markets attention Wednesday will be fixed on the US Federal Reserve chairman Ben Bernanke testimony before a joint Congressional committee meeting.

Categories: Economy, United States.

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