With our investment news briefs, Money Morning provides investors with a quick overview of the most important investing news stories from all around the world.
Existing Home Sales Up 2.9%; Malaysia's Economy Shrinks 6.2%; Staples Beats Estimates; U.K. Millionaires Halved by Financial Crisis; Treasury Yield Spread Hits Record High; Intel Won't Cut Dividend After Euro Fine; Moody's: U.S. Aaa Credit Rating Stable; Oil Surges to Six-Month High
Existing home sales in the United States ticked up 2.9% in April, according to the National Association of Realtors. The report suggests the housing glut is turning around, but from the bottom up. "Most of the sales are taking place in lower price ranges and activity is beginning to pick-up in the mid-price ranges, but high-end home sales remain sluggish," NAR chief economist Lawrence Yun told reporters, Reuters reported.
Malaysia's economy shrank 6.2% in the first quarter on slumping exports, making for the country's first contraction since 2001. "We expect the first quarter to be the worst in terms of the contraction," Suhaimi Ilias, an economist at Maybank Investment Bank Bhd., told Bloomberg. "The strong fiscal impulse will lift the economy, especially in the second half of this year and 2010, with the implementation of the annual budgets and the two economic stimulus packages."
Office supply retailer Staples Inc. (Nasdaq: SPLS) slightly beat first-quarter earnings, though still reported a loss. Net earnings fell $147 million, or 20 cents a share, in the quarter ended May 2, Reuters reported.
Slumping property prices, falling stock markets and shrinking bonuses have more than halved the amount of millionaires in the United Kingdom, the Centre for Economics and Business Research said. In last year's report, the CEBR said there were 489,000 people in Britain with assets of at least 1 million pounds ($1.6 million). Now, that number is 242,000, Bloomberg reported.
The yield spread between two- and 10-year Treasury notes widened to a record on Wednesday as concern about mounting sales of U.S. debt will overwhelm the U.S. governments efforts to keep interest rates low, Bloomberg reported. The so-called yield curve widened to 2.75 percentage points, surpassing the previous record of 2.74 percentage points set on Aug. 13, 2003. Ten-year note yields have risen more than 100 basis points since Fed officials started buying up to $300 billion of U.S. debt in March to drive consumer rates down and lift the economy from recession.
Seeking to reassure investors, Intel Corp (Nasdaq: INTC) said it will not cut its dividend or slash capital spending despite being fined a record $1.5 billion (1.06 billion euros) by EU regulators for antitrust violations. "There's still plenty of cash flow from operations to invest in our business, pay the fine and pay the dividend," said Stacy Smith, the chief financial officer of the world's largest chipmaker at an analyst event in London yesterday (Wednesday), according to Reuters.
Moody's Investors Service reaffirmed the U.S. government's Aaa credit rating is stable "even with a significant deterioration" in the nation's debts, bolstering confidence in a rebound from the recession. The rating is supported by "a diverse and resilient economy, strong government institutions, high per-capita income, and a central position in the global economy," New York-based Moody's said in a statement, according to Bloomberg.But the firm warned that any "reassessment" of long-term growth prospects could put pressure on the rating.
Crude oil prices rose to a six-month high yesterday (Wednesday) after Saudi Arabia's Oil Minister Ali al-Naimi said the global economy is now strong enough to deal with oil prices of $75 to $80 a barrel, Reuters reported. U.S. crude oil for July delivery rose $1.00 to settle at $63.45 a barrel, after earlier reaching $63.82, the highest level since mid-November. London Brent crude gained $1.26 to settle at $62.50 a barrel.