Wednesday May 23rd

23-05-2018

Stock futures point to triple-digit loss amid Target earnings miss, China trade worries

U.S. stock index futures futures pointed to a lower open on Wednesday after retail giant Target reported earnings that missed expectations while trade talks with China remained uncertain after President Donald Trump said Tuesday he was "not satisfied"with the discussions. He also told reporters he was not sure about whether a scheduled meeting with the North Korean leader Kim Jong Un would actually happen. At around 8:30 a.m. ET, Dow futures indicated an implied drop of about 160 points at open. The Nasdaq and S&P 500 futures also indicated a lower start to the session for their respective markets. The Dow, which started Tuesday's session on a high note, dropped nearly 200 points by the closing bell following the president's remarks. In corporate news, several major retailers reported earnings on Wednesday. Shares of Minneapolis-based Target sank more than 5 percent in premarket trading after it reported first-quarter earnings that missed analysts' expectations on both the top and bottom lines. The company blamed poor spring weather for the disappointing performance as it works to remodel many of its locations. Home improvement retailer Lowe's also missed expectations for the first quarter, reporting a rise in sales of just 0.6 percent versus expectations of a 3 percent increase, according to Reuters. High-end jeweler Tiffany, meanwhile, easily beat analysts' estimates. The company's stock rose more than 14 percent in premarket trading after reporting earning per share of $1.14 versus expectations of 83 cents. It also raised its full-year guidance in light of the solid beat. On the data front, there will be flash manufacturing and services PMIs (purchasing managers' index) at 9:45 a.m. ET and new home sales due at 10 a.m. ET. Minutes from the Federal Reserve's latest meeting will be released at 2 p.m. ET. The minutes are expected to show the Federal Open Market Committee on track to raise rates in June in an effort to stay ahead of creeping inflation. Minutes from their previous meeting showed that "all participants" expected both the economy to strengthen and inflation to rise "in coming months," citing strong spending patterns and a consistently tight labor market. Asian stocks closed lower on Wednesday after U.S. President Donald Trump said he was "not satisfied" with the latest round of trade talks with China. In Tokyo, Nikkei 225 fell 1.18 percent, or 270.60 points, to close at 22,689.74 amid the move higher in the yen. The Kospi erased early losses to edge up by 0.26 percent to 2,471.91 as gains in large cap technology names offset declines seen in other major sectors. Greater China markets pulled back. Hong Kong's Hang Seng Index declined 1.42 percent by 3:29 p.m. HK/SIN, hurt by falls in financials and energy. Mainland stock indexes saw similar losses: The Shanghai composite dropped 1.4 percent to close at 3,169.24, its largest single-day fall in around a month, according to Reuters. The smaller Shenzhen composite slid 1.1 percent to end at 1,834.72. Oil prices edged lower on Wednesday as the market took a breather on expectations OPEC may raise supplies as early as June, although geopolitical risks kept a floor under the market. Brent futures dipped 4 cents to $79.53 a barrel by 0006 GMT, after climbing 35 cents on Tuesday. Last week, the global benchmark hit $80.50 a barrel, the highest since November 2014. U.S. West Texas Intermediate (WTI) crude futures eased 2 cents to $72.18 a barrel, having climbed on Tuesday to $72.83 a barrel, the highest since November 2014. Gold prices rose on Wednesday amid a steady dollar and uncertainty over the outcome of U.S.-China trade talks, while investors waited for minutes from the Federal Reserve's meeting for clues on the outlook for U.S. interest rates. Spot gold was up 0.2 percent at $1,293.53 per ounce, as of 0112 GMT. U.S. gold futures for June delivery were little changed at $1,292.50 per ounce.