Research Market strategy
By Swissquote Analysts
Published on 18.05.2022
Morning news

Walmart Earnings Are Dented by Food Inflation, Staffing Costs

Topic of the day

Walmart slumped $16.86 a share, or 11%, to $131.35—retreating to its lowest level in more than a year—after the retail giant reported that earnings fell sharply, hurt by higher supply-chain and labor costs. The country’s largest retailer by revenue said sales increased in the most recent quarter, but higher product, supply-chain and employee costs ate into profits, sending the retailer’s stock sharply lower Tuesday. Throughout the pandemic, Walmart and other big-box retailers have benefited from higher demand for a host of goods and while some costs have increased, profits have grown along with sales. On Tuesday Walmart said its net income in the April-ended quarter fell 25% from a year ago, and that earnings per share came in below analysts’ forecasts. Net income was $2.05 billion in the latest quarter. Adjusted earnings per share were $1.30, missing the consensus forecast from analysts of about $1.48, according to FactSet. Overall revenue was up 2.4% to $141.57 billion. U.S. comparable sales, those from stores or digital channels operating for at least 12 months, rose 3% in the quarter ended April 29, led by strength in food categories, the company said Tuesday when it reported earnings. The number of U.S. transactions stayed flat during the quarter, while the amount spent each time rose 3%, the company said. Walmart said it expects U.S. comparable sales for the full year to grow about 3.5%, up from a prior estimate of 3%. It expects operating income to decrease about 1%, excluding currency fluctuations, down from a previous estimate of an around 3% increase.

Looking for New Structured Product Ideas?

Swiss stocks

The stock market in Switzerland closed with gains for the third trading day in a row on Tuesday. The SMI improved by 0.5 percent to 11,730 points. Among the 20 SMI stocks, there were 16 price gainers and four losers. A total of 32.02 (previously: 34.57) million shares were traded. The Clariant share was in focus, increasing by 7.3 percent. The company had announced that it will terminate the governance agreement with its largest shareholder Saudi Basic Industries Corp (SABIC) at its annual general meeting on June 24. The expiration means that SABIC can now go beyond its current Clariant stake of 31.5 percent and potentially initiate a takeover bid, analysts at Baader Helvea implied. Hearing aid manufacturer Sonova reported favourable figures. The stock eventually lost 0.9 percent after initial gains. Sales in the financial year 2021/22 increased by 29 percent in local currency compared to the previous year to 3.36 billion Swiss francs. Regarding the outlook, Sonova expressed optimism that this would continue. For the new financial year, sales are expected to increase by 17 to 21 percent and EBITA by 12 to 18 percent.

International markets


European shares pushed solidly higher Tuesday after China Covid progress helped lift Asian markets. Stocks have swung dramatically lately as investors have tried to assess the path for markets amid wide-ranging economic, geopolitical and Covid-19 concerns. Weighing most heavily on many investors' minds is the outlook for the U.S. economy as the Federal Reserve raises interest rates. The Stoxx Europe 600 index gained 1.2% to 439.0 points. In Paris, the CAC 40 and the SBF 120 rose 1.3% each. In Frankfurt, the DAX 40 gained 1.6% and the FTSE 100 in London gained 0.7%. Elior (+7.5%) benefited from opportunistic trading on the eve of the publication of its results for the first half. Engie (+5.3%) raised its forecast for 2022, after seeing its results jump in the first quarter thanks in particular to the rise and volatility of energy prices. Casino gave up 2.8% having gained about 15% over the Friday and Monday sessions. The group confirmed Monday that it has launched a process to sell GreenYellow, its subsidiary specializing in the production of renewable energy. On Friday, the stock had jumped after Les Echos reported that Casino had mandated several banks to carry out such a transaction whose amount could reach 1.5 billion euros. Daimler Truck rose by 6.5 percent. The company presented an unexpectedly strong quarterly report and raised its forecast for the financial year. The development of the operating result in particular was positively assessed at the stock exchange. The consensus of analysts had previously expected a decline, but Daimler Truck now plans to maintain the previous year's result. Delivery Hero recovered by 4.1 percent. The gain was also attributed to a favourable study by Bryan Garnier regarding the shares of food delivery services. Just Eat Takeaway went up by a good 5.5 per cent.

United States

U.S. stock indexes posted strong gains Tuesday as investors snapped up beaten-down shares in the technology, banking, airline and other sectors. The S&P 500 climbed 80.84 points, or 2%, to close at 4088.85. The Dow Jones Industrial Average rose 431.17 points, or 1.3%, to 32654.59. The tech-heavy Nasdaq Composite jumped 321.73 points, or 2.8%, to 11984.52, rebounding after it fell 1.2% on Monday. On Tuesday, fresh data from the Commerce Department showed some signs of economic resilience, with U.S. shoppers increasing retail spending in April for the fourth consecutive month. That, as well as the reopening of some stores in Shanghai this week after a strict Covid-19 lockdown, provided some sources of optimism. Tech was the best-performing sector of the S&P 500 on Tuesday. Chip maker Nvidia and electric-car maker Tesla both advanced more than 5%, while Apple, Microsoft, PayPal Holdings and Zoom Video Communications all gained more than 2%. Shares of Citigroup rallied $3.59, or 7.6%, to $51.05 after a securities filing showed Warren Buffett’s Berkshire Hathaway Inc. bought about $3 billion worth of shares in the bank. Paramount Global and Ally Financial —other companies in which Berkshire invested—also rallied. United Airlines surged $3.43, or 7.9%, to $46.97 a share after the carrier lifted its revenue outlook due to improved travel demand. American Airlines and Delta Air Lines both posted big gains as well. Twitter gained 93 cents, or 2.5%, to $38.32, even after Tesla Chief Executive Elon Musk said his $44 billion bid for the social-media company can’t move forward until the company is clearer about how many of its accounts are fake. Twitter has now wiped out all the gains it notched after Mr. Musk disclosed a stake in the company in April and is trading well below his deal that values the company at $54.20 a share. Home Depot shares rose $4.96, or 1.7%, to $300.95 after the home-improvement retailer boosted its outlook for the year and said shoppers were spending more per shopping trip.


Chinese stocks are mixed in morning trade, slightly improving from opening losses. The benchmark Shanghai Composite Index is up 0.6% at 3713.83, while the Shenzhen Composite Index sheds 0.1% to 2491.88.

In Asia, major indexes closed mixed on Wednesday. In Tokyo, the Nikkei-225 climbs 0.6 per cent to 26,825 points. In Seoul, meanwhile, the trend is only well maintained and in Shanghai and Hong Kong the indices are even trading slightly lower. Among the individual stocks, Renesas Electronics rose by a good 3 per cent in Tokyo. The company announced investments to expand its semiconductor manufacturing.


Long-dated U.S. Treasury yields rose to their highest levels in at least a week on Tuesday, after April’s retail sales data showed the economy still has strength and Federal Reserve Chairman Jerome Powell said the U.S. could plausibly have a “softish landing.” The 10-year Treasury note gained 9 basis points on Tuesday to 2.968%. The 2-year yield also rose 14 basis points to 2.713%.


Jefferies cuts Allianz target to EUR 255 (260) - Buy

Citi lifts Diageo target to GBP 41.50 (40) - Neutral

LBBW reduces Ströer target to EUR 70 (75) - Buy

Produced by MBI Martin Brückner Infosource GmbH & Co. KG on behalf of Swissquote. All news is acquired with journalistic accuracy. No liability is assumed for delays or errors.