The Japan Times - Stocks in the red as investors worry about growth and inflation

Retail behemoth Walmart reported solid sales and profit growth for last year, but its shares dropped more than six percent as its outlook for a slowing increase in consumer spending this year spooked investors.

The company sees three to four percent annual sales growth this year, lower than the 5.1 percent it recorded in 2024.

The company's sales are looked on as a bellwether for US consumer activity.

"It's the largest retailer in the United States: when Walmart says clearly that conditions are worsening with a drop in consumption and they believe inflation will start moving back up this year, this will certainly raise questions," said Andrea Tueni, head of markets at Saxo Banque France.

Wall Street's main indices moved around one percent lower in late morning trading.

"Investors are mulling the impact of interest rates staying higher for longer, given that policymakers expect US trade policy to push up the price of consumer goods," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

Meanwhile minutes from the US central bank's January meeting released on Wednesday suggested officials were not likely to cut interest rates any time soon -- having reduced them at three successive meetings -- citing worries about the impact of Trump's policies.

Economists have warned that Trump's pledge to ramp up tariffs on trade partners while slashing taxes, regulations and immigration could fan inflation.

Geopolitical uncertainty also led gold to hit a fresh record above $2,954 as investors rushed into the safe-haven commodity, which is sought out in times of uncertainty.

Briefing.com analyst Patrick O'Hare said "the negative disposition is rooted in part on concerns about the market's trading behavior."

With traders having recently reliably piled in to "buy the dip" -- that is to push up stocks when they turn lower -- O'Hare said more retail investors are piling into the market.

"That is when it becomes a bigger short-term risk," he said, with the potential for much sharper downturns if these short-term investors pull out.

"A failure of the buy-the-dip approach will shake out weak-handed holders of new positions banking on its success and it will invite a momentum shift in the price action that can have a cascading effect in some instances," O'Hare said.

Dealers have also been keeping a nervous eye on talks over Ukraine with Trump calling Ukrainian leader Volodymyr Zelensky a "dictator" on Wednesday.

The United States has provided essential funding and arms to Ukraine after Russia's invasion but Trump made an abrupt policy shift by opening talks with Moscow.

Paris stocks managed to end the day with a small gain but Frankfurt and London both slid lower.

Asian markets struggled on Thursday.

Shanghai managed to pare back early losses to end flat after Trump suggested on Wednesday that a trade deal with China was "possible".

Hong Kong dropped more than one percent as the China tech surge came to an end.

Tokyo was weighed down by a stronger yen, which broke below 150 per dollar as the Bank of Japan eyes more interest rate hikes.

- Key figures around 1630 GMT -

New York - Dow: DOWN 1.3 percent at 44,028.76 points

New York - S&P 500: DOWN 0.8 percent at 6,096.00

New York - Nasdaq Composite: DOWN 0.8 percent at 19,898.07

London - FTSE 100: DOWN 0.6 percent at 8,662.97 (close)

Paris - CAC 40: UP 0.2 percent at 8,122.58 (close)

Frankfurt - DAX: DOWN 0.5 percent at 22,314.65 (close)

Tokyo - Nikkei 225: DOWN 1.2 percent at 38,678.04 (close)

Hong Kong - Hang Seng Index: DOWN 1.6 percent at 22,576.98 (close)

Shanghai - Composite: FLAT at 3,350.78 (close)

Euro/dollar: UP at $1.0473 from $1.0428 on Wednesday

Pound/dollar: UP at $1.2640 from $1.2582

Dollar/yen: DOWN at 149.68 from 151.40 yen

Euro/pound: UP at 82.85 pence from 82.81 pence

West Texas Intermediate: UP 0.8 percent at $72.68 per barrel

Brent North Sea Crude: UP 0.8 percent at $76.66 per barrel

burs-rl/cw

H.Takahashi--JT