Global indicators signal weak US housing and a stronger Germany
March 18 saw some interesting indicator releases around the world. Housing starts for February, released by the US Census Bureau, were highly anticipated by investors in the US real estate sector along with investors in the country’s overall economic performance. The SPDR S&P 500 ETF (SPY) and the Vanguard S&P 500 ETF (VOO) are some of the popular ETFs tracking overall economic performance in the US. These ETFs track the benchmark S&P 500 index.
Key indicators from Europe and Russia
Investors in European equity (EZU) also saw some eagerly awaited and important releases on Tuesday. The ZEW (Zentrum für Europäische Wirtschaftsforschung, the Centre for European Economic Research) came out with its “ZEW Indicator of Economic Sentiment” for Germany (EWG) as well as the entire Eurozone (VGK). The Eurozone’s inflation figures also came in. We’ll discuss these key releases in Part 2 of this series.
Vladimir Putin’s Russia saw industrial production figures released by the Federal State Statistics Service. These figures are a key indicator for investors in Russian equity through the VanEck Vectors Russia ETF (RSX).
US housing starts record their biggest drop in four years
Let’s start our analysis with the US.
Housing starts in the US fell sharply in February. Housing starts, which record the number of new building constructions started and intended primarily for residential buildings, declined by about 17% over the previous month. For February, the US saw about 897,000 new housing starts against median expectations of 1,040,000 and a January reading of 1,081,000. Housing permits, however, recorded a positive gain of about 3%. The housing sector in the US can become unpredictable during the winter.
Homebuilding companies D.R. Horton. (DHI) and Lennar (LEN) lost 0.98% and 0.91%, respectively. The iShares Dow Jones US Real Estate ETF (IYR), which tracks US real estate performance, lost 0.09% on the news. The IYR invests about 1.59% of its holdings in the Macerich Company (MAC), which is an independent REIT (real estate investment trust). MAC lost about 3.47% on the news.
While investors in the US real estate sector became wary of their holdings, the ZEW economic sentiment indicator boosted confidence among investors in Germany. Find out more in the next part of this series.