FedEx, China weakness, pound defeat: 5 keys on Wall Street

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FedEx’s drastic cost-cutting measures and weak earnings update put shares on track for their lowest weekly close in two months as fears for the global economy grow.

The yuan falls to 7 against the dollar, as the decline in housing and consumption in China continues.

Sterling falls to its lowest level since 1985 on dismal retail sales data, and the government takes over Rosneft’s (MCX: ROSN ) refineries in Germany as Berlin tries to avert a looming fuel supply emergency.

Here’s what to know in the financial markets on Friday, September 16.

  1. When FedEx goes, so does the global economy
    Global growth fears have a name, and it’s called FedEx (NYSE: FDX ). Shares of the delivery and logistics company plunged nearly 20% in after-hours trading on Thursday, after its new chief executive announced it will close 90 locations worldwide, park some cargo planes and freeze hiring. . Although the company did not specifically mention job cuts, it will also close five corporate offices.

FedEx, with its global reach and exposure to both businesses and households, is often taken as a loose indicator of global economic activity.

Its profit margins have been under pressure for months due to rising fuel bills and rising labor costs due to tight labor markets. But its top line is also suffering, with economic weakness in Europe and Asia leaving its biggest division, Express, $500m short of forecasts in the latest quarter, while the ebb from the pandemic-driven surge in e-commerce deliveries left its land division $300 million short.

  1. Weak Chinese data puts pressure on local stocks and the currency
    China stock benchmarks all fell more than 2% and the offshore yuan fell through the 7 per dollar level as the economy put out a mixed bag of numbers that analysts said were weaker than they first appeared. view.
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Growth in industrial production and retail sales accelerated, but largely due to tax breaks targeting the domestic auto industry.

Other stimulus measures aimed at propping up a moribund housing sector sparked a rebound in fixed asset investment , but markets were fixated on another larger annual decline in house prices , which were down 2.1% annually in August. They have been 12 consecutive months without changes or with decreases.

Also worrying are private sector figures showing a 23% drop in tourist spending over the recent bank holiday weekend and a 26% year-on-year drop in cinema attendance over the same period.

  1. Stocks Set for Lowest Weekly Close in Two Months; Michigan consumer sentiment
    US stocks are headed for their lowest weekly close in two months as news from FedEx, China and Europe (see below) obscures the broader outlook for corporate earnings.

As of 06:25 ET (10:25 GMT), {{8873| Dow Jones Futures}} were down 230 points, or 0.8%, while S&P 500 Futures were down 0.9% and Nasdaq 100 futures down 1.1%. All three major spot indices had fallen between 0.6% and 1.4% on Thursday after a flurry of US data showed the economy slowing despite the labor market remaining tight.

The big economic number to be released later is the Michigan Consumer Sentiment Index at 10:00 ET, where attention will be focused on any signs that inflation expectations are becoming “unanchored” from the Federal Reserve’s medium-term target. Of 2%. A severe inversion of the US yield curve suggests that is not yet the case.

  1. British pound plunges to a new low after dismal retail sales
    The pound sank to a new 37-year low against the dollar after data showed retail sales slumped in August, a reflection of a deepening cost of living crisis {{news-2893431||| acute}}.
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The data showed the extent to which the rebound in energy and fuel prices has dented consumers’ purchasing power, although spending continues to be supported in the short term by the strength of the labor market, savings from the time of the pandemic and -increasingly- the increase in consumer credit.

Analysts said the figures increase the likelihood that the interest rate differential with the United States will widen next week, when the Fed raises rates more than the Bank of England .

Sterling fell as low as $1.1351 before paring losses to trade at $1.1400 by 0630 ET, down 0.6% on the day. It also fell 0.3% against the euro .

  1. Germany steps up energy emergency measures
    Germany {{noticias-2893439|||took control of three refineries owned by the Russian state oil company Rosneft, with the aim of tackling an impending fuel supply crisis for the capital, Berlin.

The Schwedt refinery in northeast Germany, along with two others in the south of the country, will become state-run, similar to the German subsidiaries of gas monopoly Gazprom (MCX: GAZP ) . at the beginning of the year, when it started cutting off supplies to Europe.

The European Union earlier this week approved another €5 billion aid package to Ukraine to help it continue its fight against the Russian invasion. Russia’s problems inside Ukraine, meanwhile, seem to continue to deteriorate: the chief prosecutor of the Luhansk People’s Republic was killed by a bomb that exploded in his office building earlier, a day after he distributed a video address in which told locals that “there is no need to panic” following the defeat of Russian forces around Kharkiv last week.

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