RTTNews - The major markets across Europe are likely to open weaker on Thursday, tracking the negative lead from Wall Street, which retreated in reaction to a Treasury Department's auction that attracted more bidders sending yields higher. Better-than-expected existing home sales data were offset by increasing house inventories, inviting mixed reaction from traders who lacked conviction about a recovery.
A report from the National Association of Realtors said that existing home sales rose 2.9% to an annual rate of 4.68 million units in April from a downwardly revised rate of 4.55 million units in March. Economists had expected sales to rise to a 4.66 million unit rate from the 4.57 million unit rate originally reported for the previous month. While the pace of existing home sales increased compared to the previous month, total housing inventories at the end of April represented a 10.2-month supply compared with a 9.6-month supply in March.
In another development, the Treasury Department's auction of $35.0 billion worth of 5-year notes drew a high-yield of 2.310% while attracting moderately strong demand, with the bid-to-cover ratio coming in at 2.32.
Across-the-board selling was witnessed in late trading on concerns higher cost of borrowing might apply brakes on economic recovery. The Dow closed down 173.47 points or 2.1% at 8,300, the Nasdaq closed down 19.35 points or 1.1% at 1,731 and the S&P 500 closed down 17.27 points or 1.9% at 893.
The markets in Hong Kong, China and Taiwan are closed for public holidays. Mixed trading is being witnessed among the other major Asian markets open for trading.
The European averages ended in positive territory on Wednesday, led by banks and retail stocks on speculation that that the worst of the global recession is over and the economy is in a recovery mode. Rise in oil prices and an in-line French consumer confidence index offset the negative sentiment generated by mixed U.S. existing home sales data, lifting the major indices above the unchanged line.
The FTSEurofirst 300 index of pan-European blue chips closed 0.63% higher at 871 points, while the narrower DJ Stoxx 50 index rose 0.61% to 2,138 points. The U.K.'s FTSE 10 index rose 0.10% to 4,416, while France's CAC 40 index climbed 0.76% to 3,295 and Germany's DAX index surged up 0.30% to 5,001.
On the economic front, the European Commission is set to issue monthly economic sentiment survey results. Eurozone economic sentiment is seen at 69 in May, up from 67.2 in April. Meanwhile, consumer confidence is expected to improve to minus 30 compared to minus 31 in April. Also, the Confederation of British Industry is slated to issue quarterly Distributive Trades survey at 6.00am ET.
A report released by the Federal Statistical Office (Destatis) in Germany earlier in the day revealed that the number of persons in employment living in Germany declined by 130,000, or 0.3% in April 2009 year-over-year. Compared with March 2009, the number of persons in employment was up by 68,000 persons (+0.2%) in April, the report noted.
Among corporates, Tate & Lyle might react after reporting a sharp drop in profit attributable to equity shareholders for the full year. However, adjusted earnings from continuing operations and total sales for the year increased from last year.
Pharmaceutical companies might be in focus after French drug giant Sanofi-Aventis (SNY) and San Francisco, California-based Exelixis Inc. (EXEL) announced the signing of a global license agreement for investigational drugs XL147 and XL765 and the launch of a broad collaboration for the discovery of phosphoinositide-3 kinase inhibitors, PI3K, for the treatment of cancer.
Automakers might react to the news that General Motors demanded an additional $415 million in cash from Germany to sell its Opel Unit to Fiat SpA and talks between the negotiators have been stalled inconclusively.
Royal Ahold NV might react to the news that the profit for its first quarter declined by 24%, hurt by higher taxes and charges on assets, despite higher revenues.
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