Lululemon tumbles as US stocks close lower

Summary

US stocks closed lower on Friday, with the Dow, S&P 500 and Nasdaq all retreating, while Lululemon plunged 17.4% after cutting its full-year forecasts. The dollar was subdued on Monday, with sterling easing to $1.3513 and the euro little changed at $1.1609. Oil remained elevated, with Brent at $96.85 and US crude at $92.10 amid renewed tensions around the Strait of Hormuz.

Equities

The FTSE 100 closed flat at 10,831.09 on Friday, while the FTSE 250 rose 0.36%. The mid-cap index nevertheless recorded its biggest weekly fall in three months, with UK government bond yields rising during the week.

Experian fell 4.4% on Friday after US Federal Housing Finance Agency Director Bill Pulte accused credit reporting agencies of overcharging Americans. He also directed Fannie Mae and Freddie Mac to approve all lenders to use the VantageScore credit scoring system.

Oxford Nanopore Technologies dropped 6.9% on Friday after healthcare investor Novo Holdings sold 49 million shares in the biotech company for £74 million. Vodafone moved in the opposite direction, gaining 2.7% after Goldman Sachs upgraded the telecoms group to ‘buy’ from ‘sell’.

Wall Street closed lower on Friday following stronger-than-expected US employment figures. The Dow Jones Industrial Average fell 0.51% to 53,413.60, the S&P 500 lost 0.38% to 7,718.41 and the Nasdaq Composite declined 0.29% to 26,506.99.

US nonfarm payrolls increased by 162,000 in August, almost three times the consensus forecast of 56,000, while June and July payroll figures were revised higher by a combined 55,000. The unemployment rate remained at 4.1%, and markets raised the probability of a 25-basis-point Federal Reserve rate increase in September to 58.4%, from 49.4% on Thursday.

Lululemon tumbled 17.4% on Friday after the sportswear company cut its full-year revenue and profit forecasts. Adobe dropped 6.7% after announcing that long-serving chief executive Shantanu Narayen would be replaced by company insider Anil Chakravarthy.

Credit-reporting companies were also among Friday’s biggest fallers. Fair Isaac plunged 16.7%, Equifax fell 6.4% and TransUnion lost 5.9% following the US housing regulator’s intervention over credit scoring. Semiconductor stocks provided some strength, with the sector gaining 3.4%, while software and services stocks fell 2.1%.

Forex & Commodities

The US dollar was broadly steady in Asian trading early on Monday, with the dollar index at 99.16 after struggling to hold gains following Friday’s stronger-than-expected US jobs figures. The euro was little changed at $1.161, while sterling edged lower to $1.351. The yen strengthened to 156.0 per dollar, supported by expectations that the Bank of Japan could raise interest rates this month.

Markets are now pricing a roughly 57% chance of a Federal Reserve rate increase in September after US job growth accelerated sharply in August and unemployment remained at 4.1%. Attention turns to US producer price data on Thursday and consumer inflation figures on Friday, which could influence the Fed’s September decision.

The European Central Bank is expected to raise its deposit rate to 2.75% on Thursday, while futures indicate a 75% chance of another increase to 3.0% by December. Markets are also pricing a 75% probability that the Bank of Japan will raise rates by a quarter point on 18 September.

Spot gold fell early on Monday, down 0.6% to $4,403 an ounce after declining 1% on Friday. Stronger US employment data increased expectations of higher interest rates, putting pressure on bullion ahead of this week’s inflation releases.

Oil prices climbed early on Monday as renewed US-Iran attacks on vessels raised concerns about supply through the Strait of Hormuz. Brent rose 1.25% to $97.48 a barrel, while WTI gained 1.25% to $92.62. Brent had risen 7.8% last week and WTI nearly 10%, while OPEC+ kept its October production policy unchanged.