Global markets were lower overnight, as US markets (S&P 500 Index -1.2%) fell after digesting Walmart’s profit downgrade, sparking concerns around weaker consumer sentiment.
Walmart ended the day down -7.6%, leading retailers lower like Kohl (-9.1%), Target (-3.6%), Macy’s (-7.2%) and TJX Companies (-4.2%). E-commerce stocks were also lower – Shopify slumped -14.1% after announcing it is laying off staff as the pullback in online spending has been larger than anticipated since the peak of the pandemic. E-commerce-related stocks were also weaker with Amazon down -5.2% as well as e-commerce payment providers (Square (-7.1%) and Paypal (-5.7%).
Consumer discretionary and technology (NASDAQ Index -2%) were the worst performing sectors while utilities were up.
It wasn’t all bad news though, McDonalds, Coca Cola, 3M, and General Electric were all up on better-than-expected results.
Tech giants Alphabet (Google) and Microsoft are both up strongly in after-hours trade, delivering their results after the bell. Despite missing market expectations their guidance came in better than feared given pessimism priced into the market recently. Google ad revenue wasn’t as weak as feared, while Microsoft’s cloud business continues to be the star.
European markets (Stoxx 600 Index -1.7%) were down on a mixed day of earnings as investors brace for the upcoming Fed decision tomorrow morning (local NZ time).
Myer Holdings (MYR:ASX)
Retailer Myer bucked the retail sell-off, surging +21.2% following the release of an upbeat trading update with strong sales momentum in the second half, making up from weak sales during the lockdown given the nature of their goods are tilted towards reopening.
Full-year sales expected to be up about +12.5% from last year to $2,990m. Most importantly full-year net profit after tax is expected to be between $55m to $60m, doubling the previous year which also included a $22m job seeker support payment.
We are Hold rated on Myer.
Australia & New Zealand Market Movers
The Australian market (ASX 200 Index, +0.3%) was up as commodity stocks lifted the market on a mixed day of trade.
Energy and Materials was the best performing sectors, while a profit downgrade from US retail giant Walmart saw most local retail stocks struggle.
Buy now pay later provider Zip jumped +19.9%, doubling from its recent bottom in June on a sound update, but is still down -85% from its peak a year ago.
The New Zealand market (NZX 50 Index, -0.3%) was down on Tuesday, led by gentailers which make a large contribution to the index.
Meridian Energy fell -1.6% after announcing it has engaged SRG Global to maintain its seven hydro stations and five windfarms, the news weighing down on gentailer peers Contact Energy (-1.2%), Manawa Energy (-0.2%) and Genesis Energy (-1.9%).
Offsetting these losses were gains in real estate companies Argosy Property leading the market up +3.9% on no news other than paying out its quarterly dividend, Precinct (+2.9%), Goodman Property Trust (+1.2%) and Kiwi property group (+1%) were also up on the day.
3 Things Markets will be Watching this Week
- The Fed releases its interest rate decision, and the US announces GDP figures for the second quarter.
- A busy week of US corporate earnings led by tech heavyweights Microsoft, Alphabet (Google), Meta Platforms (Facebook).
- Locally, Australian inflation (CPI) data and AGM’s from Ryman Healthcare, Pacific Edge, Mainfreight and a half year result from Rio Tinto.