US equities finished lower as investors focus on retail earnings

Stocks fell as the rally that has pushed prices higher since mid-June appeared to lose steam. Traders also assessed the latest retail data and minutes from the Federal Reserve.

On the ASX today earnings reports are expected from ASX (ASX:ASX), Blackmores (ASX:BKL), Evolution Mining (ASX:EVN), IRESS (ASX:IRE), Origin (ASX:ORG), Transurban (ASX:TCL) and Treasury Wine (ASX:TWE).

The Dow Jones Industrial Average shed 0.5 per cent, The S&P 500 slid 0.72 per cent while the Nasdaq Composite tumbled 1.25 per cent

Stocks were volatile as traders assessed the latest Fed meeting minutes, which showed that the central bank would continue its aggressive hiking campaign until it can tame inflation. At the same time, the Fed also indicated that it could soon slow the speed of its tightening, while also acknowledging the state of the economy and risk to the downside for gross domestic product growth.

Overnight energy was the standout sector on some crude strength. Semi conductrs were another laggard on earnings and cautious press articles. Airlines, precious metals, media, homebuilders, EVs, solar, underperformed while consumer Staples retail, beverages, insurance, pharma were among relative outperformers.

Meanwhile, traders continued to comb through corporate earnings from the retail sector. Target shares slipped 2.6 per cent after posting earnings that widely missed expectations Target reported a 90 per cent plunge in profit in the second quarter, versus the same period a year ago, as it discounted unwanted inventory.

Lowe’s ended the session marginally higher despite a mixed quarter. Retail sales data released Wednesday was flat in July, although consumers did increase spending online.

Interestingly behind the strong retail earnings numbers is what economists call “trading down,” when consumers facing tough times swap high-priced items for cheaper versions. It’s happened before—during the economic downturn from 2009–2011, the ratio of high- to low-quality goods bought in the US dipped, then increased again when the economy was booming from 2015–2017. Trading down is one reason why discount retailers typically do better than other companies during economic downturns. Walmart shares have outperformed the S&P 500 in each of the past five recessions, according to a Bank of America analysis.

Currencies

US Dollar saw solid gains against yen and commodity currencies, but was weaker vs euro.

One Australian dollar fell almost 1 cent to the US dollar yesterday, buying 69.37 US cents (Wed: 70.26 US cents), 57.62 Pence Sterling, 93.68 Yen and 68.19 Euro cents.

Commodities

Iron ore futures are pointing to a 2.6 per cent fall.

Gold lost $13.00 or 0.7 per cent to US$1777 an ounce.

Silver was down $0.36 or 1.8 per cent to US$19.85 an ounce.

Copper was down $4.10 or 1.1 per cent to US$358.35 a pound.

Oil added $0.74 or 0.9 per cent to US$87.27 a barrel.

Futures

The SPI futures are pointing to a 0.2 per cent fall.

Figures around the globe

Across the Atlantic, European markets closed lower. Paris fell almost 1 per cent, Frankfurt dropped 2 per cent and London’s FTSE closed 0.3 per cent lower.

Asian markets closed higher. Tokyo’s Nikkei gained 1.2 per cent, Hong Kong’s Hang Seng added 0.5 per cent and China’s Shanghai Composite closed 0.5 per cent higher.

Yesterday, the Australian sharemarket gained 0.3 per cent to 7128.

Ex-dividends

There are seven companies set to trade without the right to a dividend.

GPT Group (ASX:GPT) is paying 12.7 cents unfranked
Insurance Australia (ASX:IAG) is paying 5 cents 70 per cent franked
Korvest (ASX:KOV) is paying 35 cents fully franked
Microequities Asset Management Group (ASX:MAM) is paying 2 cents fully franked
MyState (ASX:MYS) is paying 11.5 cents fully franked
QBE Insurance Group (ASX:QBE) is paying 9 cents 10 per cent franked
US Student Housing REIT (ASX:USQ) is paying 1.4743 cents unfranked

Dividends payable

There are two companies set to pay eligible shareholders today.

Alternative Investment Trust (ASX:AIQ)
CVC (ASX:CVC)

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.