Europe open: Stocks slump after Target results jolt retailers
By Frank Prenesti
Date: Thursday 19 May 2022
(Sharecast News) - European shares fell sharply at the open on Thursday after US equities were sold off on the back of poor earnings from retailers as inflationary pressures started to hit the bottom line.
The pan-European Stoxx 600 index was down 1.47% in early deals, having fallen 1% in the previous session.
US markets were jolted after a big profit miss from retail chain Target, following rival Walmart the day before, which cut its profit guidance as consumers started to rein in spending.
Asia markets were also weaker overnight, with Chinese tech stocks lower after Tencent also missed on profits.
"With consumer spending power expected to be eroded further through interest rate rises, the worry is that Target's pain is a precursor for yet more struggles to come for retailers," said Hargreaves Lansdown analyst Susannah Streeter.
"A trend also seems to be emerging of people wanting to save their dollars to spend on experiences like holidays rather than homewares with luggage at Target selling fast."
In equity news, Royal Mail shares fell as the UK letter and parcel carrier said it would be looking for £350m in cost cuts to cope with rising fuel and labour costs.
Homeserve shares soared as Canada's Brookfield Asset Management has agreed to buy the London-listed emergency home repairs group in a £4.1bn deal.
Shares in French care home operator Orpea fell sharply after a report from France Info radio stated there was evidence pointing to potential financial irregularities linked to the company's Swiss unit.
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