European markets were in full retreat today and US markets have been pursuing them on the downward path, on fears of slowing Asian growth.
‘Markets are looking east and don’t like what they are seeing. Slowing economic growth, currency devaluation, and stock market mayhem in China have hit commodities and mining stocks,” said Laith Khalaf, a senior analyst at UK stock broking and wealth management firm Hargreaves Lansdown.
Stateside, investors have the additional concern of this afternoon’s release of the minutes from the July meeting of the Federal Reserve’s policy makers, and whether today’s inflation figures have made it more or less likely that a rate rise is imminent.
“Today’s FOMC minutes will provide markets with an insight into the varying viewpoints at the July meeting. While everyone holds out for some concrete clue of when the Fed will raise rates, much has passed since July's meeting which would make it difficult to draw conclusions from any change in language,” suggests Joshua Mahony, a market analyst at spread betting firm IG.
“Chinese yuan devaluation has thrown in the possibility of another dip into deflation, which should be enough to put even the most hawkish FOMC member off hiking in September. Despite the fact that much has happened between the July meeting and today's, the minutes will provide a clear indication of how the committee is shifting in sentiment as the U.S. economy develops,” he concluded.
The Dow Jones was down 175 at 17,335 in lunchtime trading, with all but one – McDonald’s (NYSE:MCD) – of the index’s 30 constituents in the red.
Hardest hit of all was integrated oil giant Chevron (NYSE:CVX), down 2.9%, as oil prices continue to decline, while sector peer ExxonMobil (NYSE:XOM), down 2.0%, was sharing space with Chevron in the dog-house.
The US oil benchmark, West Texas intermediate, was down 4.43% at US$40.71 a barrel, after the U.S. Energy Administration reported an increase in crude oil stockpiles from last week.
Retail giant Wal-Mart (NYSE:WMT) separated the slumping oil giants, down 2.1%, after its profit warning yesterday.
The S&P 500 does not often suffer a double-digit fall, but it’s a case of “double-bubble” today, with the index down 21 points at 2,076, while the Nasdaq Composite gave back 52 points at 5,008.
Home improvements chain Lowe’s Cos (NYSE:LOW) defied the trend, rising 0.3% to US$73/25, after a mixed set of results. Earnings came in short of expectations, though sales growth surprised to the upside.
Elsewhere in the retail sector, office equipment and consumables supplier Staples (NASDAQ:SPLS) also came up shy of market forecasts with its second quarter earnings. The shares were 2% lower at US$13.87.
Second quarter sales were down 5% on a year earlier, but were up an underlying 1% once the impact of store closures was removed.
Another retailer, Target (NYSE:TGT), surrendered early gains, and was down 0.8% at US$79.66, despite raising its earnings outlook for the year on the back of better-than-expected second quarter profits.
The company now expects earnings per share (EPS) for the year to be in the range of US$4.60 to US$4.75, 10 cents higher at both ends than the previously indicated range.
US data storage giant Seagate Technology (NASDAQ:STX) is to buy Dot Hill Systems Corp, a supplier of hardware and software solutions, in a deal worth US$694 million.
The disk drive maker’s shares retreated US$1.71 cents to US$50.34.
PayPal Holdings (NASDAQ:PYPL), now once again an independent company having broken free of eBay, shed 65 cents at US$37.34, after it acquired mobile payment start-up Modest.
The company’s technology makes it easier for merchants to make their products available for purchase within cell phone apps.