U.S. retail giant Walmart has slashed its earnings forecast a few days ago, exacerbating concerns in the retail industry that consumers are cutting spending in the face of decades of high inflation. Walmart shares fell nearly 8% in early trading, and other retailers were also affected. Shares plummeted across the board , the main US stock indexes opened lower on Tuesday (26th).
Before the deadline, the Dow Jones Industrial Average fell nearly 0.5%, the Nasdaq Composite fell nearly 1.2%, the S&P 500 fell nearly 0.7%, and the Philadelphia Semiconductor Index fell nearly 0.6%.
Walmart’s negative news affected other retail stocks, Target Department Store (TGT-US) fell 4.71% in early trading, Kohl’s (KSS-US) fell 6.28%, Amazon (AMZN-US) fell 3.45%, Dollar General ( DG-US) fell 2.15% and Costco (COST-US) fell 2.84%.
Traders expect the Federal Reserve (Fed) to raise interest rates by 3 yards (75 basis points), which is one of the measures to combat inflation. Whether economic warning signs will prompt the Fed to change its stance.
Investors also need to pay close attention to Fed Chairman Powell’s remarks at a news conference after the announcement of the interest rate decision to assess whether recession risks will slow the Fed’s pace of policy tightening.
In addition, the International Monetary Fund (IMF) downgraded its global economic growth forecast for 2022 and 2023, saying the outlook for the global economy is “dim and more uncertain”. The IMF now forecasts that the global economy will grow by 3.2% this year, and that growth will further slow to 2.9% by 2030. The two revised figures are 0.4 and 0.7 percentage points lower than their April forecasts, respectively.
Tech 5 giants Microsoft (MSFT-US), Google parent Alphabet (GOOGL-US), and semiconductor company Texas Instruments (TXN-US) are due to report after the bell, as traders assess risks, including Russia’s impact on Europe. Continued disruptions to natural gas supplies, as well as coronavirus restrictions and real estate issues in China.
Commodity prices are surging on signs that supply constraints are outweighing concerns about the economy, with European natural gas prices rising to their highest in more than four months, while crude oil and copper surged.
The EU held a meeting of energy ministers of member states to debate whether to support the European Commission’s proposal to regulate energy consumption. Russian gas company Gazprom warned yesterday that it will further reduce gas flows this week due to another maintenance issue.
As of 21:00 on Tuesday (26th) Taipei time:
Stocks in focus:
Walmart (WMT-US) fell 7.95% to $121.52 a share in early trade
Walmart, the U.S. retail giant, lowered its annual profit outlook again this year, mainly because the impact of severe inflation on food and fuel is compressing consumer spending on non-essential categories, so it needs to lower commodity prices to clean up high inventory.
Coinbase (COIN-US) fell 6.28% to $62.86 a share in early trade
The U.S. Securities and Exchange Commission (SEC) is investigating whether Coinbase, a cryptocurrency exchange, improperly allowed Americans to trade digital assets that were supposed to be registered as securities, reports say. However, Coinbase denies any non-compliance. Notably, a former top product manager at Coinbase was also charged last week for alleged insider trading.
In addition, Goldman Sachs downgraded Coinbase to a “sell” a few weeks ago, saying the company “needs significant cost cutting” to prevent cash from drying up.
UBS (UBS-US) fell 9.48% to $15.19 a share in early trade
UBS Group’s second-quarter net profit was US$2.11 billion, an increase of 5.1% over the same period last year, but it underperformed market analysts’ median forecast of US$2.44 billion. The bank’s net profit fell below market expectations for two consecutive years, dragging down the market. Shares tumbled more than 7% earlier.
UBS Chief Executive Ralph Hamers called the quarter one of the “most challenging” for investors in the past decade, with the bank’s investment banking revenue down 14 percent and saying the operating environment “remains unclear” in the second half .
Today’s key economic data: The revised monthly rate of construction permits in the United States in June was 0.1%, the previous value – 0.6% The revised value of the annualized total number of construction permits in the United States in June was 1.696 million, the previous value was 1.685 million The US S&P/CS20 in May The annual rate of the non-seasonally adjusted housing price index in large cities was 20.5%, expected 20.6%, and the previous value was 21.2%. The US May S&P/CS20 non-seasonally adjusted housing price index reported a reading rate of 1.3%, which was 1.5% expected, and the previous value was 1.7%. US May FHFA The monthly rate of the house price index was reported at 1.4%, compared with the previous value of 1.6%. The annual rate of the FHFA house price index in the United States was reported at 18.3% in May, compared with the previous value of 18.8%. Richmond Fed Manufacturing Index previous value – 19 US July Conference Conference Consumer Confidence Index expected 97.2, the previous value was 98.7
Wall Street Analysis:
Katerina Simonetti, a consultant at Morgan Stanley Private Wealth Management, sees the slew of risks exposing vulnerabilities to a 6% rebound in global stocks from June lows. “This is likely to be a bear market rally, but there are still significant risks to the market. By the end of the year, we could see significant market volatility and even further declines,” he said.
The Fed’s rate decision date is looming, and John Milroy, investment adviser at Ord Minnett, said a 3-yard (75 basis point) rate hike is most likely, but the hike won’t end unless officials see a slump in demand and a moderation in inflation.