Disappointing Earnings, Trade Concerns May Weigh On Wall Street

Disappointing Earnings, Trade Concerns May Weigh On Wall Street

The major U.S. index futures are pointing to a lower opening on Wednesday, with stocks likely to see further downside following the weakness seen in the previous session.

Disappointing earnings news from Target (TGT) may weigh on the markets, as the discount retailer is moving significantly lower in pre-market trading.

Traders may also continue to react to comments from President Donald Trump expressing some dissatisfaction with trade talks with China.

“Our Trade Deal with China is moving along nicely, but in the end we will probably have to use a different structure in that this will be too hard to get done and to verify results after completion,” Trump said in a post on Twitter.

U.S. stocks fell on Tuesday, unable to sustain positive momentum from the previous session despite overtures from China.

China will cut the import tariffs it charges on cars to 15 percent, which will give a boost to foreign automakers in the world’s largest market, especially for U.S. automakers.

The Chinese Finance Ministry said Tuesday that it would cut import duties on passenger vehicles from 25 percent to 15 percent, starting July 1st.

Still, U.S. President Donald Trump says he’s “not really” pleased with China’s trade talks so far.

The Dow Jones Industrial Average closed 178.88 points, or 0.7 percent lower at 24,834.65. The S&P 500 Index fell 8.54 points, or 0.3 percent to 2,724.46 and the Nasdaq Composite edged down 15.58 points or 0.2 percent to 7,378.46.

Kohl’s (KSS) announced the company now expects its adjusted fiscal 2018 earnings to be $5.05 to $5.50 per share, compared to its prior guidance of $4.95 to $5.45. Shares tumbled 7 percent.

J.C. Penney (JCP) shares also moved sharply lower after the abrupt resignation of the company’s CEO Marvin Ellison.

Meanwhile, Micron (MU) shares jumped 7.4 percent after a deal with Intel. The chipmaker raised quarterly guidance Monday.

Adobe (ADBE) will buy e-commerce platform Magento in $1.68 billion deal. Adobe shares were up fractionally.

Commodity, Currency Markets

Crude oil futures are falling $0.28 to $71.92 a barrel after slipping $0.15 to $72.20 a barrel on Tuesday. Meanwhile, after rising $1.10 to $1,292 an ounce in the previous session, gold futures are inching up $1.20 to $1,293.20 an ounce.

On the currency front, the U.S. dollar is trading at 109.94 yen compared to the 110.90 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.1708 compared to yesterday’s $1.1779.

Asia

Asian stocks closed broadly lower on Wednesday and safe-haven assets such as gold and the Japanese yen climbed after U.S. President Donald Trump said he was “not really” pleased with the U.S.-China trade talks so far and that there was a “substantial chance” his planned summit with North Korean leader Kin Jong Un in June may not work out.

Chinese markets fell the most in a month as coal mining stocks slumped after authorities intervened in the coal market to bring down prices. The benchmark Shanghai Composite Index tumbled 45.11 points or 1.4 percent to 3,169.24, while Hong Kong’s Hang Seng Index plunged dropped 568.71 points or 1.8 percent to 30,665.64.

Japanese shares fell the most in two months as a stronger yen on trade worries pulled down shares of exporters. Mixed manufacturing data also weighed on the markets. The manufacturing sector in Japan continued to expand in May, albeit at a slower pace, the latest survey from Nikkei revealed with a manufacturing PMI score of 52.5, down from 53.8 in April.

The Nikkei 225 Index slumped 270.60 points or 1.2 percent to 22,689.74, dragged down by exporters, shipping companies and steelmakers. The broader Topix Index ended down 12.26 points or 0.7 percent at 1,797.31. Mitsui OSK Lines, Kawasaki Kisen and JFE Holdings fell around 3 percent each.

Australian shares ended lower for a fifth consecutive session, with energy stocks coming under selling pressure after Santos rejected Harbour Energy’s $10.8 billion takeover offer. The benchmark S&P/ASX 200 Index dipped 9.40 points or 0.2 percent to 6,032.50, while the broader All Ordinaries Index ended down 9.60 points or 0.2 percent at 6,140.30.

Shares of Santos slumped 8.4 percent, and Woodside Petroleum, Origin Energy and Oil Search lost 1-2 percent. Healthcare stocks also underperformed, with CSL and Healthscope declining 1-2 percent.

Commonwealth Bank shed 0.6 percent after it agreed to sell a 37.5 percent stake in Chinese insurer BoComm Life Insurance Company Limited to Japan’s Mitsui Sumitomo Insurance. ANZ and NAB also closed lower, while Westpac edged up marginally.

Australia’s construction work done rebounded slightly in the first quarter after falling sharply in the previous quarter, the Australian Bureau of Statistics reported today.

Europe

European stocks have fallen sharply on Wednesday as oil prices have dropped, geopolitical risks have returned to the fore and uncertainty has continued over the formation of an anti-establishment government in Italy.

There was also no respite on the data front as flash survey data from IHS Markit showed that the Eurozone private sector grew at the slowest pace in one-and-a-half years in May. The composite output index dropped to an 18-month low of 54.1 from 55.1 in April.

Elsewhere, U.K. consumer inflation climbed 2.4 percent year-on-year in April, slightly slower than the 2.5 percent increase seen in March, data from the Office for National Statistics revealed. The rate was expected to remain at 2.5 percent.

While the U.K.’s FTSE 100 Index has fallen by 0.6 percent, the French CAC 40 Index is down by 1.4 percent and the German DAX Index is down by 1.7 percent.

Julius Baer Group shares have fallen after the Swiss bank said its assets under management rose 3 percent in the first four months of 2018.

Energy stocks have also come under pressure as oil prices have fallen on speculation that OPEC may raise oil output as soon as June.

Rio Tinto shares have also moved to the downside after the mining giant said it is in talks about the potential sale of its stake in Indonesia’s Grasberg mine for A$3.5 billion.

Meanwhile, British retailer Marks & Spencer Group has rallied after announcing it would close 100 stores by 2022.

U.S. Economic Reports

At 10 am ET, the Commerce Department is scheduled to release its report on new home sales in the month of April. New home sales are expected to drop to an annual rate of 679,000.

The Energy Information Administration is due to release its report on oil inventories in the week ended May 18th at 10:30 am ET.

Crude oil inventories are expected to decrease by 1.6 million barrels after falling by 1.4 million barrels in the previous week.

At 1 pm ET, the Treasury Department is scheduled to announce the results of its auction of $36 billion worth of five-year notes.

The Federal Reserve is due to release the minutes of its latest monetary policy meeting at 2 pm ET. The minutes may she additional light on the outlook for interest rates.

At 2:15 pm ET, Minneapolis Fed President Neel Kashkari is scheduled to participate in a Q&A on New Energy Economic Reality in Bismarck, North Dakota.

Stocks In Focus

Shares of Target (TGT) are moving significantly lower in pre-market trading after the retailer reported weaker than expected first quarter results.

Restaurant chain Red Robin Gourmet Burgers (RRGB) is also seeing substantial pre-market weakness after reporting first quarter earnings and revenues that came in below analyst estimates.

Shares of Container Store (TCS) may also come under pressure after the storage products retailer reported fiscal fourth quarter earnings that missed expectations.

On the other hand, shares of Tiffany (TIF) are moving sharply higher in pre-market trading after the luxury goods retailer reported better than expected first quarter results and raised its full-year guidance.

Home improvement retailer Lowe’s (LOW) is also seeing pre-market strength after providing upbeat guidance despite reporting weaker than expected first quarter results.

Shares of Nordstrom (JWN) may also see initial strength after Deutsche Bank upgraded its rating on the retailer’s stock to Buy from Hold.

by RTTNews Staff Writer

For comments and feedback: editorial@rttnews.com

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