SCOREBOARD: Home and hosed

If you heard something odd last night, something eerily similar to the shrieking of a pack of wild hell hounds – through pain or rage, perhaps both – then what you heard was the sound of The Legions. That is, the legions of undead US pessimists.

You see, S&P/Case-Shiller released their house price index last night. It rose 1.2 per cent in February following a 1 per cent gain the month prior, to be 9.3 per cent higher annually. It cannot be!

The thing is, this is the strongest growth in seven years and the fact that all 20 cities in the index posted positive growth is something that hasn’t happened since 2005. Some cities, like Atlanta, experienced their strongest growth on record – 16.5 per cent there. Dallas prices were up 7 per cent too, which is a 12-year high.

It doesn’t stop there, though. Double digit price gains were aplenty: Phoenix up 23 per cent, 19 per cent in San Francisco, 18 per cent in Vegas, not to mention Los Angeles, San Diego and even Detroit. This is quite something given that housing was at the crux of the US recession and the global financial crisis.

Markets took these results in their stride though. The S&P was only up 0.3 per cent (1597) and the Dow was 21 points higher (14,839). It's not so bad I guess, as these indexes are already at records (new ones last night, actually), while a poor earnings report from Pfizer probably spooked some. It certainly hit healthcare stocks, which were a key underperformer for the session. On the flipside, tech stocks did well, with the Nasdaq 0.7 per cent higher (3328).

Over in Europe, the major indices were mixed with the Dax up 0.5 per cent and the CaC and FTSE100 down 0.3 per cent and 0.4 per cent respectively. Not much going in terms of news – Cyprus approved the European bailout, the Italian government reaffirmed their commitment to a balanced budget, and Germany said it wanted to find ways of sustainably creating jobs and lifting investment and growth.

European yields were down smalls and we had some mixed data. German consumer confidence rose a bit and the unemployment rate remained low, unchanged in April at 6.9 per cent. In Italy, unemployment was stuck at 11.5 per cent, while for the eurozone as a whole, the rate rose to 12.1 per cent from 12 per cent.

CPI fell to 1.2 per cent year-on-year from 1.7 per cent on the back of seasonal changes and recent falls in energy prices. Other than that we saw some positive earnings reports from European banks, which helped that sector.

For the price action elsewhere, the commodities roller coaster continued last night. Some serous algorithms must be battling it out, and then there is interference from government. It’s a nightmare out there. Crude fell 1.6 per cent ($92.97), copper was off 1.1 per cent, although gold was up smalls ($7.6 to $1475).

In the forex space the big mover was the euro, up almost a big figure to 1.3172. Then we saw the Australian dollar modestly higher at 1.0371, the British pound almost 60 pips higher at 1.5537 and the yen is at 97.445.

Apart from that there was little action on the rates side. The US 10-year is at 1.67 per cent, the 5-year at 0.68 per cent and the 2-year at 0.215 per cent.

Remaining data was mixed with some third-tier activity indexes deteriorating. The Chicago PMI was down to 49 in April from 52.4, and the Milwaukie NAPM down to 48.4 from 50.698. But on a more positive note, consumer confidence rebounded in April, rising to 68.1 from 61.9.

For today, the SPI suggests our market will be up smalls, 5 points to 5173. Data-wise we see RP Data-Rismark’s house price series and HIA new home sales. A Chinese manufacturing PMI follows around 1100 AEST, and then following on from that this afternoon, we see the Reserve Bank's commodity price series.

Tonight the key data is the ISM manufacturing report (expected to fall slightly), construction spending and of course the FOMC decision (at 0400 AEST tomorrow morning).

Have a great day…

Adam Carr is a leading market economist.

Follow @AdamCarrEcon on Twitter.