👀 Copy Legendary Investors' Portfolios in One ClickCopy For Free

Fed minutes, US futures, gold, Walmart - what's moving markets

Published 21/08/2024, 09:36
© Reuters.
XAU/USD
-
US500
-
WMT
-
TGT
-
TJX
-
1YMH25
-
NQH25
-
LOW
-
IXIC
-
TOL
-
JD
-
DXY
-
KEYS
-

Investing.com -- The main Wall Street looks set to start the day with minor gains as investors await the release of the minutes from the last Federal Reserve meeting as well as nonfarm payroll revisions. Gold continues to hit record highs, while Walmart looks set to sell its stake in Chinese e-commerce giant JD (NASDAQ:JD).com. 

1. Fed minutes, payrolls revision to provide rate cuts insight

Investors are looking to the release of the minutes from the last Federal Reserve meeting, due later in the session, for further insight into the prospect of an imminent rate cut, and its likely size.

The U.S. central bank kept rates on hold at its last gathering in late July, maintaining its benchmark overnight interest rate in the current 5.25%-5.50% range.

However, comments from Fed officials subsequently have tended to point towards a rate cut in September, and the minutes are expected to reinforce this dovish stance.

Federal Reserve Governor Michelle Bowman said on Tuesday that she remains cautious on interest rate cuts and warned against overreacting to recent data showing easing inflation as upside risks remain a threat.

However, Bowman, a known hawk, added it would "become appropriate to gradually lower the federal funds rate to prevent monetary policy from becoming overly restrictive on economic activity and employment" if there is further progress on inflation.

Additionally, preliminary revisions to U.S. labor data are also due to be published later in the session, and a large downward revision is expected, which would further support cutting interest rates. 

“The job creation number could be revised downward by as much as 800,000 jobs, according to some estimates, which would mean the labor market may not be as strong as portrayed earlier,” analysts at ING said, in a note.

2. Futures edged higher ahead of Fed minutes

U.S. stock futures edged higher Wednesday, ahead of the release of minutes from the last Fed meeting as well as revisions to payrolls data as investors seek clues for when the Federal Reserve will start cutting interest rates. 

By 04:20 ET (08:20 GMT), the Dow futures contract was 45 points, or 0.1%, higher, S&P 500 futures climbed 5 points, or 0.1%, and Nasdaq 100 futures rose by 10 points, or 0.1%.

The benchmark Wall Street indices closed with small losses Tuesday, snapping healthy winning streaks. The broad-market S&P 500 index dipped 0.2%, the tech-heavy Nasdaq Composite slid 0.3% and the Dow Jones Industrial Average fell 0.2%.

Investors will focus on the minutes from the Federal Reserve’s most recent meeting and revisions to recent payrolls data, ahead of Friday’s Jackson Hole speech by Jerome Powell.

In the corporate sector, Toll Brothers (NYSE:TOL) rose premarket after the homebuilding company surpassed earnings expectations in the fiscal third quarter, and lifted its full-year deliveries guidance.

Keysight Technologies (NYSE:KEYS) stock soared over 10% premarket after the test equipment manufacturing company posted solid fiscal fourth-quarter guidance on revenue. 

3. Walmart to sell stake in JD.com

Walmart (NYSE:WMT) has decided to change tack while tackling the important Chinese market, selling its stake in Chinese e-commerce firm JD.com and focusing on its own operations in the second-largest economy in the world.

The supermarket chain is seeking to raise about $3.74 billion by selling its stake in JD.com, Bloomberg reported Tuesday, with Morgan Stanley acting as the broker-dealer of the offering.

"This decision allows us to focus on our strong China operations for Walmart China and Sam's Club, and deploy capital towards other priorities," Walmart said.

The U.S. retailer owns a 5.19% stake in JD.com, according to LSEG data, with the partnership beginning in 2016 when Walmart sold its Chinese online grocery store, Yihaodian in return for a 5% stake in JD.com.

Walmart reported a 17.7% year-on-year rise in revenue from its China business to $4.6 billion in the second quarter on the back of strong growth in its Sam's Club warehouse chain and its digital offering.

JD.com reported a better-than-expected second-quarter profit, but China's retail market has been hit by a persistent downturn in consumer confidence amid concerns about employment and incomes.

4. More retail earnings in focus

The U.S. earnings season is drawing to a close, but there are still numbers primarily from the retail sector to digest.

Target Corporation (NYSE:TGT) and TJX Companies (NYSE:TJX) are due to release quarterly results later in the session, and investors will be looking to see if they grab market share from the back-to-school sales.

The National Retail Federation data from early July showed expected back-to-school spending per household will be down slightly at $875 versus last year’s record of $890.

Home improvement retailer Lowe’s (NYSE:LOW) cut its full-year forecast on Tuesday, in another indication of a difficult environment for the retail sector.

Around 93% of S&P 500 companies have reported earnings results for the second quarter, and thus far 79% of companies that have reported have surpassed analyst profit estimates, while only 60% have beaten on revenues, according to FactSet data.

5. Gold close to record highs

Gold prices slipped lower Wednesday, remaining near record highs as the prospect of lower U.S. interest rates battered the dollar and spurred more flows into the yellow metal.

By 04:20 ET, spot gold fell 0.2% to $2,509.52 an ounce, while gold futures expiring in December fell 0.1% to $2,547.40 an ounce.

Gold has seen significant price increases, with gains of over 20% so far this year and over 30% over the past 12 months, climbing to new all-time highs as the prospect of lower interest rates bodes well as it reduces the opportunity cost of investing in non-yielding assets.

That said, there are other key factors that have helped the yellow metal surge higher, with one of the primary drivers being geopolitical tension. 

The freezing of Russia's foreign currency reserves in 2022 has made Western bonds less appealing to non-democratic countries. As a result, gold has become a more attractive alternative for central banks.

Adding to this is the issue of significant budget deficits in major economies like the U.S., U.K., and France. 

The current political climate in the U.S. is also contributing to gold’s rise, with proposals for increased tariffs, price controls and large subsidies building anxiety among investors.

 

 

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2024 - Fusion Media Limited. All Rights Reserved.