ASX set to slip as inflation concerns worry Wall Street

Investors reviewed more corporate report cards from retailers following a solid report on Tuesday showing that retail sales jumped in October. TJ Maxx and Marshalls parent TJX rose 6.8 per cent after reporting strong third-quarter financial results. Home improvement retailer Lowe’s gained 0.6 per cent as it raised its revenue forecast for the year following strong third-quarter financial results.

Investors are closely watching retail sales reports and retailer earnings as they try to gauge just how much rising inflation is impacting business operations and consumer spending. Many companies have warned that profit margins could suffer as they face supply chain problems and higher costs overall. Consumers have been absorbing higher prices on a wide range of goods and that has investors worried about the potential for a pullback in spending.

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The latest earnings reports reflect some of the damage from rising inflation. Target, which reported mostly solid financial results, also saw its margins tighten because of higher merchandise, freight and supply chain costs. Its stock fell 5.3 per cent.

Walmart reported similarly solid financial results on Tuesday, but also revealed that inflation hurt its profit margins.

Macy’s will report its latest financial results on Thursday.

Investors received a mixed report on the housing market. Construction of new homes in the US fell 0.7 per cent in October, but a big jump in the number of permits last month points to anticipation by builders that supply chain problems that have dogged them for much of the year will soon ease. Homebuilders were mixed following the report.

AP

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