U.S. Economy Grows by 4.2 Percent, but Pending Home Sales Dip 0.7 Percent
Asia equity markets are trading higher on Thursday, following Wall Street’s lead from the previous session as U.S. markets extended their record high streak.
At 0142 GMT, Japan’s NIKKEI 225 is trading 22994.38, up 146.16 or +0.64%. South Korea’s Kospi Index is at 2319.18, up 10.15 or +0.44%. In Australia, the S&P/ASX 200 is trading 6.40 or 0.10% higher at 6358.60 and in China, the Shanghai Index is trading 2769.33, up 0.04 or +0.00%.
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U.S. Equity Indexes
The major U.S. stock indexes posted strong gains on Wednesday, boosted by the announcement that Canada had rejoined the NAFTA talks, following the deal reached by the U.S. and Mexico earlier this week.
The tech-driven NASDAQ Composite reached another record high on Wednesday, led by strong gains in Google-parent Alphabet, Apple and Amazon. The benchmark S&P 500 Index settled over 2900 for the first time and the blue chip Dow Jones Industrial Average moved closer to a record high.
Shares of Google-parent Alphabet and Amazon rose 1.5 and 3.4 percent respectively after Morgan Stanley raised their price target on the stocks.
U.S. Economic News
The U.S. economy grew at a stronger pace in the second quarter than previously thought. According to the Commerce Department, U.S. Gross Domestic Product (GDP) rose to 4.2 percent from an initial forecast of 4.1 percent.
U.S. Pending Home Sales
According to the National Association of Realtors’ pending home sales index, signed contracts to buy existing homes fell 0.7 percent in July compared with June. The gauge was down 2.3 percent compared with July 2017. That is the seventh straight month of annual declines. Traders use the pending home sales report to forecast future closed sales.
“It’s evident in recent months that many of the most overheated real estate markets – especially those out West – are starting to see a slight decline in home sales and slower price growth,” Lawrence Yun, chief economist for the Realtors, said in a release. “The reason sales are falling off last year’s pace is that multiple years of inadequate supply in markets with strong job growth have finally driven up home prices to a point where an increasing number of prospective buyers are unable to afford it.”
Essentially, buyers have been struggling to find affordable homes this year, as the supply of homes for sale has fallen annually for most of the year. It was finally flat in July, but the market needs a significant surge in new listings in order to cool prices and boost sales.