Financial Update

Financial worries knock Toronto stocks lower

· TSX -158.33pts (Reuters)prompted by weak financials, as worries over growing fallout from the credit crisis rattled investor confidence. Home-grown anxiety also weighed on the large financial sector as the major Canadian banks are set to report quarterly results this week.
· Dow -241.81pts In New York, stocks fell sharply on credit concerns, while global growth worries stung big technology and industrial companies.
· Dollar -.21c to $95.16US A negative tone in North American equity markets hurt the Canadian dollar, as financials sold off on both sides of the border on credit market fears, and the heavyweight energy sector of the Toronto Stock Exchange fell as oil prices fluctuated
· Oil +$.52to $115.11US per barrel
· Gold -$7.80 to $819.90US per ounce
Data on gross domestic product for the second quarter will be released on Friday. That will also be the last major piece of data before the Bank of Canada makes its Sept. 3 rate announcement.


Existing U.S. home sales up in July

MARY ANN CHASTAIN, THE ASSOCIATED PRESS

The Associated Press

The listing agent has boldly stated a change in the sales price to attract buyers to this home in a neighborhood in Columbia, S.C. Monday Aug. 25, 2008. Sales of existing homes rose 3.1 percent in July, surpassing expectations, as buyers snapped up deeply discounted properties in parts of the country hit hardest by the housing bust. (AP Photo/Mary Ann Chastain)

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Deeply-discounted properties being snapped up in parts of the country hit hardest by the housing bust

August 26, 2008 Alan Zibel The Associated PressSales of existing homes in the United States rose 3.1 per cent in July, easily beating Wall Street's expectations, as buyers snapped up deeply discounted properties in parts of the country hit hardest by the housing bust.

However, the number of unsold properties hit an all-time high, the latest indication that the worst housing market slump in decades is far from over.

The National Association of Realtors reported yesterday that sales rose to a seasonally adjusted annual rate of five million units. Sales had been expected to rise by only 1.6 per cent, according to economists surveyed by Thomson/IFR.

Home sales were 13.2 per cent lower than a year ago and prices were down dramatically. The median price for a home sold in July dropped to $212,000 US, down by 7.1 per cent a year ago.
Despite the third monthly sales jump this year, the number of unsold single-family homes and condominiums rose to 4.67 million, the highest number since 1968, when the Realtors group started tracking the data.

That represented a 11.2 month supply at the July sales pace, matching the all-time high set in April.

Sales were up in all regions of the country except the South, which posted a 0.5 per cent decline. Sales rose by 5.9 per cent in the Northeast, 0.9 per cent in the Midwest and 9.7 per cent in the West.

Analysts say that until the inventory level is reduced to more normal levels, the housing slump is likely to persist. The inventory level is being driven higher by a massive wave of mortgage foreclosures.

Despite the rise in sales, Lawrence Yun, the Realtors' chief economist, was reluctant to conclude that the U.S. housing market has hit bottom.

While buyers are pouncing on lower prices -- especially in places like California, Florida and Nevada -- sales are sluggish in formerly stable states like Texas.

"People are responding to lower prices,'' Yun said, but there is "too much uncertainty'' about the housing market's future to mark a definite bottom.

One key unknown is the ability of mortgage finance companies Fannie Mae and Freddie Mac to supply money for loans. The two government-sponsored companies have cut back the availability of mortgages significantly as they cope with mounting losses from foreclosures and officials ponder whether to shore up the two struggling companies.