U.S. home sales surprise buoys American markets

Gold stocks soar as U.S. dollar falls on word one oil-rich Gulf state will convert some reserves

Gregory Thomas
Sun

U.S. markets moved further into record territory Wednesday on surprisingly steady November new home sales, while strength in gold stocks paced Canadian markets to triple-digit gains.

The U.S. Commerce Department said new home sales climbed 3.4 per cent in November to an annual rate of 1.047 million, while the median price of a new home climbed 5.8 per cent.

The Dow Jones Industrial average added 102.94 points, or 0.8 per cent, to close at a new record high of 12.510.57. The S&P 500 gained 9.94, or 0.7 per cent, to 1,426.84. The Nasdaq composite climbed 17.71 or 0.7 per cent, to 2,431.22.

The S&P homebuilders group climbed 1.9 per cent, the most in three weeks. The biggest gainer, Ryland, added $1.82 to $54.35 US. Home Depot climbed 50 cents to $39.56 US. Sherwin-Williams rose $1.81 to $64.37 US.

But even as traders toasted the potential for a recovery in the housing market, the number of vacant, completed homes climbed to a new record of 169,000, up 51 per cent from a year earlier. And a weekly index of U.S. mortgage lending activity fell for the second week in a row.

In Canada, gold stocks led a broad rally after the oil-rich United Arab Emirates announced it will convert some of its currency reserves from the U.S. dollar into euros. The news sent the greenback to its steepest losses in a week. February gold climbed $3.40, or 0.5 per cent, to $630.30 US an ounce. Goldcorp gained $1.27 to $32.73. Barrick climbed $1.13 to $35.49.

The S&P/TSX Composite Index advanced 134.42 points, or 1.1 per cent, to 12,852.59 for its biggest gain in nearly a month. The S&P/TSX Venture composite gained 59.22, or 2.07 per cent, to 2,915.86.

Unseasonably warm weather in the U.S. Northeast continues to make this winter a tough one for Canadian natural gas producers. Temperatures east of the Rocky Mountains are expected to be as high as 13 degrees Celsius above normal through Dec. 31. Next-day gas at Duke Energy's Huntingdon tolling station in Abbotsford fell 30 cents, or 4.9 per cent, to $5.85 US per million Btu. In New York, February crude dropped 76 cents, or 1.2 per cent, to $60.34 US a barrel, the lowest close since Nov. 27.

The Canadian dollar closed down 0.21 cents at 86.12 US cents after trading below the 86-cent level.

Gregory Thomas is an investment adviser and Certified Financial Planner. His market commentary is broadcast on all-news radio News1130. Views expressed are the author's alone, and not necessarily those of his employer, BMO Nesbitt Burns Inc., member CIPF. Tel: 604-631-2693.

© The Vancouver Sun 2006