- Little movement predicted in main indices
- Tech stocks dictating overseas markets
- Walmart issues a profit warning, driving stocks down 10%
Steve Clayton, Fund Manager at HL Select:
“Futures markets are suggesting a quiet day ahead for investors, with little movement in the main indices currently predicted. Wall Street saw a minor rally in the S&P 500 index, but weakness in tech stocks meant that whilst the S&P added 0.3% overnight, the NASDAQ dropped back by 0.4%. Asia saw a rally in Hong Kong, led by strength in Chinese tech stocks and Ali Baba’s announcement that it would seek a primary listing in Hong Kong.
Walmart captured the spotlight after US markets closed last night when it issued a profit warning, driving the stock down 10% in after-hours trading. The group has excess inventory to clear and expects margins to take a hit accordingly. Earnings per share at the giant retailer are expected to fall by around 13% this year, a significant reduction from previous guidance of a 1% drop.
Brighter noises came from Unilever this morning with the group reporting half year results that showed revenues rising by 8.1% and an increase in the group’s forecast for the full year growth rate. The group do see pressure on margins from rising costs, but still delivered a 17% operating margin for the first half. The group’s top brands delivered faster growth with 9.4% underlying revenue growth from the group’s stable of billion+ euro mega brands. Over 50% of group sales now come from these heavyweight names. Reflecting the rapid pace of change, Unilever highlighted that eCommerce sales have more than doubled since the start of the pandemic.
Chaos at the airports this summer is taking a toll on easyJet who have taken a £133m charge against profits from the impact of the disruption seen this summer. The group flew 95% of its schedule but has not been able to hire staff fast enough to keep up with recovering demand.
Compass Group, the world’s leading contract caterer upped its forecasts for demand growth in a trading statement that revealed a recovery to pre-pandemic levels in its most impacted division and growth far beyond the 2019 run rate in sectors from Healthcare to Sports & Entertainment. The group now sees growth for the full year of around 35% compared to a lockdown-impacted 2021 run rate.”
