While you were sleeping: US economic data surprise

BUSINESSDESK: Better-than-expected data on US housing and durable goods orders provided optimism for Wall Street that the slowdown in the pace of growth might not be as bad as feared.

Underpinning gains was a report fuelling hopes that China might act to bolster the pace of expansion in the world's No 2 economy.

In late afternoon trading in New York, the Dow Jones Industrial Average gained 0.67%, the Standard & Poor’s 500 Index climbed 0.76%, while the Nasdaq Composite Index rose 0.46%.

"We are in a market now, where in the absence of bad news the market just goes higher, and then with bad news the gains are instantly erased," Randy Frederick, managing director of active trading and derivatives at the brokerage Charles Schwab, told Reuters.

In the US, durable goods orders rose 1.1% in May, the first gain since February, according to Commerce Department data. That surpassed expectations for a gain of 0.4%.

Meanwhile, pending home sales advanced 5.9% last month after dropping 5.5% in April, a National Association of Realtors report showed.

“The economy is growing, but it’s still muddling through,” Joseph LaVorgna, chief US economist at Deutsche Bank Securities in New York, told Bloomberg News. “Concerns about the collapse of manufacturing are grossly overblown. We’re in a housing recovery.”

Others pointed to their belief that these numbers might be hard to replicate.

"With global and domestic demand continuing to weaken, we believe that this relatively brisk pace of new orders activity is unlikely to be sustained," Millan Mulraine, senior macro strategist at TD Securities in New York, told Reuters.

Some believe that the US Federal Reserve should do more to rekindle the pace of growth.

Fed Bank of Chicago president Charles Evans said the central bank didn’t provide enough stimulus last week and called for new easing, including more asset purchases.

“We should be doing more accommodation than what was adopted under the Twist,” he said in Chicago today, referring to the Fed’s June 20 decision to expand its Operation Twist programme extending the maturity of bonds on its balance sheet.

While the move “has small effects”, Mr Evans said, “it's larger effect is that it indicates the Fed is continuing to think more accommodation is important and worthwhile.”

Elsewhere, there are hopes for a stronger helping hand, too.

A commentary in the China Securities Journal said the country may introduce "more pro-active" policies to ensure stable growth in the world’s second-largest economy.

In Europe, the Stoxx 600 Index closed the day with a 1.4% increase on the previous session.

It appears that European Union leaders are starting their two-day summit tomorrow with much division about the best path forward toward resolving the ongoing sovereign debt crisis.

EU Economic and Monetary Affairs Commissioner Olli Rehn said European leaders would work at the summit on short-term steps to relieve market pressure on countries at risk.

"It is essential that [short-term policy measures] are decided by the European Council," Mr Rehn told reporters, according to Reuters.

However, Germany's Angela Merkel warned that the EU would need more power over member nations before there could be any shared liability for Europe's debt.

"Joint liability can only happen when sufficient controls are in place," she said.