Grim news from Walmart rattles US markets

A currency trader watches monitors in the foreign exchange trading room at the KEB Hana Bank headquarters in Seoul, South Korea, Tuesday, July 26, 2022. Asian stock markets were mostly higher on Tuesday as investors were preparing for another sharp interest rate hike by the Federal Reserve to cool inflation.  (AP Photo/Ahn Young-joon)

A currency trader watches monitors in the foreign exchange trading room at the KEB Hana Bank headquarters in Seoul, South Korea, Tuesday, July 26, 2022. Asian stock markets were mostly higher on Tuesday as investors were preparing for another sharp interest rate hike by the Federal Reserve to cool inflation. (AP Photo/Ahn Young-joon)

PA

U.S. markets headed for a lower open on Tuesday ahead of what is expected to be another sharp interest rate hike by the Federal Reserve this week and some embarrassing news from Walmart, which is seen as a gauge of consumer spending as well. than the retail sector in general.

Dow Jones Industrials futures fell 0.4%, as did S&P 500 futures. Global equities were mixed and oil prices rose.

The Fed is expected to announce a rate hike of up to three-quarters of a percentage point, triple the usual margin, on Wednesday as the central bank continues an aggressive campaign to stem four-decade high inflation. That would put the Fed’s benchmark rate in a range of 2.25% to 2.5%, the highest since 2018 before the coronavirus pandemic.

Late Monday, Walmart lowered its mid-quarter earnings outlook, something it rarely does. The world’s largest retailer said rising food and gas prices are forcing shoppers to cut back on discretionary items, especially clothing, which generate higher profit margins.

In May, Walmart, Target and other retailers reported that a faster-than-expected shift in customers away from items that were popular at the height of the pandemic, such as casual clothes and home goods, has left with piles of inventory that forced them to slash prices.

Walmart shares are down more than 9% before the opening bell on Tuesday and the entire retail sector is under pressure. Target, Macy’s and Kohl’s are all down about 5%.

At midday in Europe, the FTSE 100 in London advanced 0.6%, the DAX in Frankfurt lost 0.7% and the CAC 40 in Paris lost 0.3%.

In Asia, the Shanghai Composite Index rose 0.8% to 3,277.44 while the Nikkei 225 in Tokyo lost 0.2% to 27,655.21.

The Hang Seng in Hong Kong gained 1.7% to 20,905.88 after Alibaba Group, the world’s largest e-commerce company, announced plans to change the status of its shares traded in Hong Kong to make it more accessible to mainland China buyers.

Alibaba went public in New York in September 2014 and completed a secondary listing in Hong Kong in November 2019. The proposed change would upgrade Alibaba’s status in Hong Kong to a primary listing with New York, making the shares eligible for the buying through mainland brokers.

The Kospi in Seoul added 0.4% to 2,412.96 after data showed South Korea’s economy grew 0.7% stronger than expected from the previous quarter in the three months. ending in June.

Sydney’s S&P-ASX 200 was up 0.3% at 6,807.30.

The Indian Sensex fell 0.7% to 55,384.00. New Zealand and Bangkok fell while Singapore and Jakarta won.

Investors fear that aggressive rate hikes by the Fed to contain inflation that is at its highest level in four decades and similar action by central banks in Europe and Asia could derail the global economic growth.

US inflation accelerated to 9.1%, its highest level since 1981.

The U.S. economy is slowing, but healthy hiring shows it’s not in a recession, Treasury Secretary Janet Yellen said Sunday. Fed officials who publicly support a rate hike also cite a strong labor market as evidence that the economy can withstand higher borrowing costs.

On Thursday, the Commerce Department is expected to release an estimate of US economic growth for the three months ending in June. Some forecasters are expecting a second quarter contraction after output fell 1.6% in the three months to March.

In energy markets, benchmark U.S. crude rose $1.81 to $98.51 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained $2 to $96.70 on Monday. Brent crude, the price basis for international trade, advanced $1.73 to $101.92 a barrel in London. It added $1.95 the previous session at $105.15.

The dollar was unchanged from 136.72 yen on Monday. The euro returned to $1.0119.

Shares of McDonald’s and Coca-Cola rose while General Motors fell after the companies reported earnings before the bell on Tuesday.

Also this week, tech heavyweights Apple, Meta, Microsoft and Amazon are due to release their results.

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