FedEx sees global recession as commentary hits US markets
Stocks fell Friday as Wall Street wrapped up one of its worst weeks in months and traders reacted to an ugly earnings warning from FedEx about the global economy.
Further on the macro front, China’s August activity data came in better than expected with some help from policy support measures and base effects, though property metrics remained soft.
Germany seized control of three Russian owned oil refineries in Germany. This is considered a far-reaching energy policy decision to protect Germany with the refineries accounting for about 12 per cent of Germany’s oil refining capacity. Russia is no longer considered to be a reliable supplier of energy to Europe anymore.
To the markets now, on Friday in the US The Dow Jones Industrial Average dropped 0.45 per cent. The S&P 500 shed 0.72 per cent and the Nasdaq Composite slid 0.90 per cent
For the week the Dow dropped 4.1 per cent, the S&P 500 tumbled 4.8 per cent and the Nasdaq slumped 5.5 per cent.
Shares of FedEx plunged 21.4 per cent, their worst daily drop ever, after the shipments company withdrew its full-year guidance and said it will implement cost-cutting initiatives to contend with soft global shipment volumes as the global economy “significantly worsened.”
Transport stocks are typically seen as a leading indicator for the stock market as well as the economy, and FedEx pointed to weakness in Asia as one of the main reasons for its negative outlook. Shares of shipping rivals UPS dropped 4.5 per cent and XPO Logistics 4.7 per cent, respectively, and Amazon’s stock fell 2.1 per cent.
General Electric also helped undermine confidence after its chief financial officer said the company is still bogged down by supply chain problems that were raising costs. GE shares were down 3.7 per cent by Friday’s close.
The fall in FedEx shares was felt across the sectors as the company’s CEO announced he expects that the global economy is heading for a recession.
Worst performing industries included Freight/logistics, road/rail, airlines, oil drillers among the worst performers. Semis, pharma homebuilders, retailers, precious-metals miners held up better.
Further, FedEx said it is seeing a decline in the volume of freight it is handling in every region around the world. While he said US consumers are somewhat protected by the strength of the US dollar, which is increasing their purchasing power he said FedEx is seeing a slowdown in Americans’ spending as well.
On the currency front Sterling weakness was the big story in FX today.
Sterling slid to its lowest level since 1985 against the dollar on Friday after a round of weaker than expected data on UK retail sales amplified concerns that the country was headed for a prolonged recession.
The currency’s 22 per cent decline in 2022 reflects a broad and powerful rally this year in the US dollar
The Bank of England will also convene this week to announce a decision on rates, the central bank’s policymakers last met in August, when they raised England’s benchmark rate half a percentage point. They could become more aggressive this time, as the bank has said that it expects the annual inflation rate to surpass 13 percent next month.
One Australian dollar has strengthened compared to the US dollar Friday, buying 67.24 US cents
Commodities
Iron ore futures are pointing to a 0.9 per cent gain.
Gold edged up on Friday as the $US dollar stalled, but expectations of a sizeable US rate hike kept bullion well below the key $1,700 mark and en route to its worst week in four.
Silver was up $0.11 or 0.6 per cent to US$19.38 an ounce.
Copper gained $2.65 or 0.8 per cent to US$351.65 a pound.
Oil added $0.01 or 0.01 per cent to US$85.11 a barrel.
Futures
The SPI futures are pointing to a flat start, down 0.03 per cent.
Figures around the globe
Across the Atlantic, European markets closed lower. Paris fell 1.3 per cent, Frankfurt lost 1.7 per cent and London’s FTSE closed 0.6 per cent lower.
Asian markets closed lower. Tokyo’s Nikkei dropped 1.1 per cent, Hong Kong’s Hang Seng fell 0.9 per cent and China’s Shanghai Composite closed 2.3 per cent lower.
On Friday, the Australian sharemarket lost 1.5 per cent to close at 6739.
Ex-dividends
Enero Group (ASX:EGG ) is paying 6.5 cents fully franked
IPD Group (ASX:IPG ) is paying 3.7 cents fully franked
Qube Holdings (ASX:QUB ) is paying 4 cents fully franked
Service Stream (ASX:SSM ) is paying 1 cent fully franked
Dividends payable
Blackmores (ASX:BKL)
Carlton Investments (ASX:CIN)
Johns Lyng Group (ASX:JLG)
Maxiparts (ASX:MXI)
Objective Corporation (ASX:OCL)
SDI (ASX:SDI)
Summerset Group Holdings (ASX:SNZ)
Terracom (ASX:TER)
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
Copyright 2022 – Finance News Network
Source: Finance News Network
