Walmart Spikes on Beat and Raise Quarter

The news shaping the markets today

Japan’s consumer prices rose 0.5% year-over-year in January, slowing from a 0.8% rise in the previous month, exerting pressure on the JPY/USD forex pair.

New Zealand’s producer input prices rose 1.1% during the final three months of 2021, compared to a 1.6% increase in the prior quarter. The price deceleration sent the NZD/USD pair higher in forex trading this morning.

US initial jobless claims rose by 23,000 to 248,000 in the latest week, which sent the Dow Jones index lower by more than 600 points on Thursday.

Ireland’s consumer inflation slowed to 5% year-over-year in January, from 5.5% in the prior month. This being the first deceleration in inflation since February 2021 lent support to the EUR/USD forex pair.

The Philippines said its central bank held its benchmark interest rate at a record low of 2% at its latest meeting. The news sent the PHP/USD pair lower in forex trading this morning.

What’s happening: Shares of Walmart gained on Thursday, after the company reported upbeat results for its fourth quarter.

What happened: Apart from reporting strong results for the latest quarter, the company announced a dividend hike and issued a robust sales forecast.

However, Walmart reported a higher-than-expected increase in one of its costs in the fourth quarter.

How were the results: The retail giant swung to a profit in its fiscal fourth quarter ending January 31, with both top- and bottom-line metrics beating market views.

• Net revenues grew 0.5% to $152.87 billion, beating market expectations of $151.53 billion.
• Net income came in at $3.56 billion, or $1.28 per share, versus a year-ago loss of $2.09 billion, or 74 cents per share.
• Walmart reported adjusted earnings of $1.53 per share, up from $1.39 per share in the year-ago quarter, exceeding the consensus estimate of $1.50 per share.

Why it matters: Walmart’s Q4 revenues surpassed $150 billion for the first time, with customers continuing to stock up on groceries and apparel amid the pandemic.

Although online sales rose sharply during the fourth quarter, online demand has been slowing since then with customers moving back to visiting stores.

At $400 million, Walmart reported higher-than-expected logistics costs, given the global supply chain issues, and a sharp rise in paid-leave costs. The company was forced to raise prices on some of its products amid high inflation.

Walmart’s US sales grew 5.7% year-over-year, while international sales contracted by 22.6%. The company’s operating margin came in at 3.9%, while operating income grew 7.3% to $5.9 billion.

The retailer’s board approved a 2% hike in annual cash dividend, taking it to $2.24 per share for fiscal 2023. The board also approved share repurchases of at least $10 billion in the year. Management projected about 3% growth in consolidated net sales in constant currency terms and growth in earnings, excluding divestitures, between 5% and 6%.

How shares responded: Walmart’s shares gained 4% to close at $138.88 on Thursday, following the release of quarterly results. The stock has lost 4% year to date.

What to watch: Investors will keep an eye on Walmart’s online sales. Markets will also monitor any ramp in the company’s international sales.

The markets today

The British pound will be in focus today ahead of UK’s retail sales data

Context: The GBP/USD forex pair gained on Thursday, with investors monitoring announcements by the Bank of England.

Details: Markets widely expect the Bank of England to hike interest rates soon, which has supported the British pound this year. The BoE is the first major central bank to have raised interest rates since the onset of the pandemic. The Bank of England has lifted interest rates twice since December 2021 and markets foresee another hike on March 17.

UK inflation data released on Wednesday showed an acceleration to nearly a 30-year high of 5.5%, reinforcing market views of the country’s central bank announcing further interest rate hikes.

The BoE said it expects inflation to peak at about 7.25% in April, which is well above the bank’s target of 2%.

The GBP/USD forex pair recorded gains on Thursday, despite support for the greenback from the geopolitical concerns related the Russia-Ukraine conflict. Analysts on average believe the sterling is undervalued, with the GBP/USD pair shedding around 10% since the Brexit referendum in 2016.

The GBP/USD forex pair gained around 0.3% to close at 1.3615 on Thursday. Against the euro, the pound added around 0.4% to reach 83.48 pence, after hitting its strongest level since February 3.

The FTSE 100 fell 0.9% on Thursday, amid inflation and geopolitical concerns.

What to watch: Traders await retail sales data from the UK today. Britain is expected to report 1% growth in retail sales for January, after the 3.7% contraction in December.

Other Markets: US indices closed lower on Thursday, with the Dow Jones, S&P 500 and Nasdaq 100 down by 1.78%, 2.12% and 2.96%, respectively.

Support & resistances for today

Market snapshot

What else to watch today

France’s unemployment rate and inflation rate, Turkey’s consumer confidence indicator, Eurozone’s current account, construction output and consumer confidence indicator, Italy’s construction output and current account, India’s foreign exchange reserves, Canada’s retail sales, ADP employment change and new home prices, US existing home sales and Baker Hughes crude oil rigs, Russia’s full year GDP growth, as well as China’s total vehicle sales.