Exchange traded funds (ETFs) edged higher on Wednesday as a rise in mining and energy shares offset worries about unrest in the Middle East and North Africa, while analysts saw more gains in oil ahead.

  • Sales of new U.S. homes sank to a record low in February and prices were the weakest in just over seven years, underscoring the housing market’s lingering malaise. The Commerce Department said sales of new single-family homes dropped 16.9% to a seasonally adjusted 250,000 unit annual rate, the lowest since records began in 1963, after a 301,000-unit pace in January. Despite the surprise plunge in sales, economists did not believe a new downturn in the housing market was under way; with some suggesting bad weather might have been a factor. “We do not believe the housing sector is on the verge of renewed contraction. Rather, we continue to expect the recovery in housing to be disappointingly and frustratingly slow,” said Michelle Girard, an economist at RBS in Stamford, Connecticut. The Direxion Daily Real Estate Bear 3x Shares ETF (NYSEArca: DRV) ended the day 3.48% higher.
  • Gold futures settled at a record high on Wednesday as a rally for crude reinforced fears of inflation and investors remained concerned about the Middle East and North Africa and Japan. Gold for April delivery rose $10.40, or 0.7%, to $1,438 an ounce. That was enough to beat the previous record settlement of March 2, when gold closed at $1,437.70 an ounce. “Instead of looking for a reason to buy gold, no one can find a reason not to buy gold,” said Adam Klopfenstein, a senior market strategist with Lind Waldock in Chicago. The Market Vectors Junior Gold Miners ETF (NYSEArca: GDXJ) gained 3.60% on Wednesday.
  • Crude-oil futures pushed past $105 a barrel Wednesday, extending the previous session’s gains, as fighting in Libya and anti-government protests in the Middle East kept the risk of a supply shortfall on the front burner. Crude for May delivery, the new front-month contract, rose 78 cents, or 0.7%, to $105.75 a barrel on the New York Mercantile Exchange. That was oil’s highest close since late September 2008, and its fifth winning session in six. Crude’s latest advance came as coalition forces continued their air attacks on troops loyal to Libyan leader Col. Moammar Gadhafi and as at least six protesters were killed in Syria. Fears remained about the North African country’s oil production, despite assurances from Saudi Arabia that it would meet any supply shortfall resulting from Libya’s turmoil. The Oil Service HOLDRs (AMEX: OIH) ended the day flat.
  • Portugal’s minority government neared collapse Wednesday as lawmakers were poised to vote against its proposal for more austerity measures, casting further uncertainty over the debt-stressed country that has been scrambling to avoid a bailout for the past year. As the Parliament began debating the latest crisis policies, all opposition parties had already vowed to reject the measures, making the Socialist government’s failure imminent — Prime Minister Jose Socrates had said he wouldn’t be able to run the country if his plan was defeated. The political upheaval could thwart efforts by European leaders to persuade nervous investors that all is well in the 17-nation Euro zone, including Portugal, and launch another spell of market turbulence for the bloc. The Vanguard MSCI European ETF (NYSEArca: VGK) ended the day flat.

For full disclosure, Tom Lydon’s clients own GDXJ.

Gregory A. Clay contributed to this article

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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