Stock Market News Today 2018/08/24
Foot Locker second quarter results sneak past analyst forecasts.
Foot Locker shares trudged higher in pre-market trade on Friday after the purveyor of snazzy kicks and sportswear delivered a second quarter result slightly ahead of market expectations.
The Manhattan-headquartered retailer reported a 4.8 per cent year-on-year rise in total sales to $1.78bn in the three months ended August 4, which edged past the mean forecast among analysts of $1.76bn in a Thomson Reuters survey.
Net income was up 73 per cent from a year ago to $88m. That worked out to earnings of 75 cents a share, 4 cents better than analysts expected.
Comparable store sales, a key industry metric, rose 0.5 per cent, while the company’s gross margin rate increased to 30.2 per cent from 29.6 per cent 12 months ago.
Richard Johnson, chief executive, said the company remained optimistic “that our improving product flow and depth in premium styles positions us to deliver stronger comparable sales growth in the second half of 2018.”
Foot Locker shares were up 0.6 per cent in pre-market trade this morning. At Thursday’s close, the stock was up 13.5 per cent in 2018.
Investors are looking towards a key speech later in the day from US Fed chair Jay Powell.
China-focused stocks were lower but currency markets were mostly steady in early Asia-Pacific trading on Friday as concerns over global trade persisted after negotiations between the US and China ended without a clear breakthrough.
The CSI 300 index of major Shanghai and Shenzhen stocks was off 0.5 per cent and, in Hong Kong, the Hang Seng China Enterprises index was also down 0.5 per cent. The broader Hang Seng index in Hong Kong was 0.7 per cent lower, led by a 1.6 per cent fall by technology stocks.
Australian and Japanese markets fared better, with Tokyo’s Topix 0.3 per cent higher and, in Sydney, the S&P/ASX 200 was also clinging to positive territory, up 0.2 per cent, as the nation’s eyes turned to Canberra where Treasurer Scott Morrison took over leadership of the country.
The moves came after the White House said on Thursday that US and Chinese officials had ended two days of negotiations in Washington aimed at easing trade tensions with no apparent progress.
ING China economist Iris Pang said the “real concern” was how China might respond to Washington’s proposed next round of tariffs on a further $200bn of Chinese imports.
“China has repeatedly stated that it can retaliate qualitatively,” Ms Pang said. ”[That] could include placing administrative measures on US companies operating in China or following the US lead and leveraging ‘national security’ to prevent some American companies operating in the country.”
The fresh worries about the trade war between the world’s two largest economies, coupled with uncertainty surrounding the latest controversy to hit US President Donald Trump, also made markets edgy overnight.
The dollar index snapped a six-day run of declines as trade concerns came back into focus while the S&P 500 ended 0.2 per cent lower — leaving it about 0.6 per cent short of Tuesday’s intraday record high.
Foreign exchange markets were steady despite political turmoil in Australia with investors looking towards a key speech later in the day from US Federal Reserve chairman Jay Powell.
The Australian dollar added 0.5 per cent to $0.7278 with the country swapping leaders for the sixth time in a decade. Mr Morrison replaced Malcolm Turnbull as Liberal party leader, and thus prime minister-designate, in a ballot of lawmakers. The currency had tumbled 1.4 per cent on Thursday.
“[The] Australian dollar typically ignores local politics but this week’s drama in Canberra does seem to have hurt the currency . . . but history suggests [the Australian dollar] will soon return to its traditional fundamental drivers,” Westpac analysts said.
“As far as business sentiment is concerned, there is no clear link between politics and the more important measure of business conditions . . . after a decade of political volatility businesses have very low expectations about goings on in Canberra,” ANZ analysts said.
Despite Mr Trump voicing criticism of interest rate policy, analysts are not expecting surprises from the Fed chair, who is due to speak at the annual gathering of central bankers in Jackson Hole, Wyoming.
“To the extent that he remarks on current monetary policy, we suspect that he will stick to the script and simply reiterate that the gradual pace of rate hikes remains appropriate,” said Omair Sharif, a Société Générale economist.
The US dollar index, measuring the greenback against a basket of peers, was down 0.1 per cent on the session at 95.757 while the Japanese yen was a touch weaker at ¥111.40 to the dollar.
In China, the onshore renminbi exchange rate, which moves within a trading band of 2 per cent either side of a daily midpoint set by the People’s Bank of China, was 0.2 per cent weaker at Rmb6.8869 against the greenback. The offshore currency, which trades outside the band, was 0.2 per cent firmer.
China injects $22bn into banking system. China central bank injects $22bn into banking system.
The People’s Bank of China injected Rmb149bn ($22bn) into the banking system through loans to commercial banks on Friday, the government’s latest move to encourage stronger credit flows to companies and local governments.
The PBoC used its Medium-term Lending Facility to provide one-year loans to central bank at an interest rate of 3.3 per cent, the central bank said in an announcement. No previously-issued MLF loans are due to mature for the rest of this month, meaning that Friday’s injection will create a net expansion of the base money supply.
China’s top leadership has shifted towards monetary and fiscal stimulus in recent weeks amid signs that economic growth is slowing. In particular, the boost to medium-term liquidity should enable banks and other investors to increase purchases of local government bonds and lower-rated corporate bonds.
Japan July inflation stagnates, lacks demand-driven support.
Japan’s core consumer prices rose 0.8 percent in July from a year earlier, unchanged from the previous month’s gain, adding to evidence the central bank is making little headway in achieving its elusive 2 percent price target.
Subdued wage and price growth have forced the BOJ to extend its massive stimulus program despite the rising risks of the policy, such as the hit to bank profits from near-zero rates.
The BOJ last month conceded that inflation will miss its elusive 2 percent target until early 2021 and took steps to make its policy framework more sustainable.
The rise in the nationwide core consumer price index (CPI), which includes oil prices but excludes volatile fresh food prices, fell slightly short of a median market forecast for a 0.9 percent gain.
“Consumer price gains remain driven by volatile fresh food and energy inflation while underlying inflation remains subdued,” said Marcel Thieliant, senior Japan economist at Capital Economics.
“Price pressures should strengthen ahead of next year’s sales tax hike but inflation is set to remain well below the BOJ’s 2 percent inflation target.”
The so-called core-core inflation index, a more closely watched gauge the BOJ uses to strip away the effect of both energy and fresh food costs, was up 0.3 percent year-on-year in July after rising 0.2 percent in June, government data showed on Friday.
The data underscores the challenge the central bank faces in eradicating an entrenched deflationary mindset that discourages firms from raising prices for fear of scaring away cost-sensitive consumers.
“The BOJ will likely maintain its zero percent target for 10-year government bond yields for the time being to support the economy and prices,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
Wage growth remains key. While intensifying labor shortages force companies to hike hourly pay for temporary workers, they remain reluctant to raise permanent workers’ salaries for fear of incurring higher fixed costs.
Japan’s economy rebounded in the second quarter from a contraction in the first three months of this year thanks to robust household and business spending.
Real wages rose at their fastest pace in more than 21 years in June, thanks mostly to higher bonus payments, offering policymakers some hope that consumption will gain momentum and encourage firms to raise prices.