New U.S. home sales declined 8.7% in August compared to the previous month, according to data from the Census Bureau and HUD. This downturn is attributed to factors including rising mortgage rates, currently sitting at 7.64% for a 30-year fixed-rate mortgage, as well as decreasing housing inventory and builder confidence. Meanwhile, pending home sales continued to decline, according to Redfin data, although Zillow remains optimistic about new home sales in the future. The performance of homebuilder ETFs like XHB and ITB has shifted in reaction to these housing market developments. Consumer confidence also fell for the second straight month in September 2023, driven by concerns over high prices, especially for groceries and gasoline.
EQUITY
Major US stock indices fell sharply, with the Dow plunging 1.1% to its lowest close since March. Tech stocks like Amazon led the decline, dropping over 4% as the company faced an antitrust lawsuit. Investor anxiety was compounded by the risk of a potential government shutdown this weekend, which Moody's warned could harm US creditworthiness.
GOLD
Gold prices have come under pressure this week, falling below the key $1900 support level. However, positive demand fundamentals continue to highlight gold, with China's increased August imports. Going forward, gold prices will likely continue to be pressured by rising yields, although there is a risk of recession looming if the U.S. government shuts down. Technically, it is in an oversold area and poised for a short rebound.
OIL
Oil prices briefly touched $90 and rose as expectations of tighter global supplies outweighed concerns about slowing demand growth due to economic headwinds. Continued declines in US gasoline and distillate inventories pointed to steady fuel consumption, even as crude stocks rose slightly. However, further oil price gains were capped by a surging dollar and worries that aggressive central bank tightening could significantly slow economic activity and dent oil demand going forward.
CURRENCY
The US dollar has strengthened as rising US Treasury yields attract investors as risk-free "good enough return" investment vehicles. Japan's finance minister warned against intervening to curb excessive yen weakness, causing the currency to briefly rally. Germany has cut its bond issuance plans for Q4 2023 by 31 billion euros, marking a decrease in financial support amid high energy costs.