Investors look to U.S. housing data after NY markets drag the TSX down

Investors look to U.S. housing data after New York markets drag the TSX down
September 24, 2006

TORONTO (CP) - Investors will be looking to United States housing data to set the tone for stock trading this week, after disappointing U.S. indicators dragged the Toronto market down amid fears that an economic slowdown will move north.

Disappointing news from the Philadelphia Federal Reserve, which said its measure of manufacturing activity fell to an unexpected negative reading for the first time on three years, sent markets in both the U.S. and Canada tumbling last week, even as the U.S. Federal Reserve left its trendsetting short-term rate unchanged at 5.25 per cent.

Fed chairman Ben Bernanke did leave the door open for future increases, however, saying that "some inflation risks remain."

Last week's housing data also supported concerns about a decline, as housing starts in August plummeted six per cent to an annual rate of 1.67 million - the lowest level since the end of 2002. Building permits fell for the seventh consecutive month, suggesting the trend will continue.

In assessing the week ahead, existing home sales data from the U.S. will "be a big one," because investors will "see exactly how rapidly the U.S housing market is slowing down," said Gavin Graham, vice-president and director of investments at Guardian Group of Funds at BMO.

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