Morning Note: Market news and an update from Walmart.

Market News

During a volatile session, US equities gave up early gains to finish lower – S&P 500 (-1.6%); Nasdaq (-2.1%) – on renewed concerns over the AI sector prompted investors to pull back from riskier assets. Big tech was all lower, including Nvidia which opened up 5% on the back of strong results, only to end down 3%. The VIX volatility measure rose from 21 to 28. Bitcoin fell back to $84,000 and is now a third below last month’s peak, albeit only back to the levels of last April.

Treasuries provided a safe haven, with the 10-year yield slipping to 4.07%. However, gold slipped back to $4,030 an ounce as as expectations of a December Federal Reserve rate cut waned following the jobs report. The highly anticipated Labour Department report, postponed by the government shutdown, showed that non-farm payrolls in September rose by 119,000, well above the forecasted 50,000.

The equity market drawdown continued in Asia this morning: Nikkei 225 (-2.4%); Hang Seng (-2.4%); Shanghai Composite (-2.5%). In Japan, the government unveiled $112bn in fresh spending as part of a stimulus package. The yen steadied against the dollar after Japan issued its strongest warning yet to foreign exchange markets over sharp recent movements in the currency.

The FTSE 100 is currently 0.9% lower at 9,450. UK retail sales came in lower than expected for October, causing the pound to pare gains – $1.3075 and €1.1335. Britain’s borrowing overshoot swelled to £9.9bn underscoring the perilous state of finances ahead of the budget. 10-year gilt yields remain elevated at 4.6%.

A Donald Trump-backed 28-point Ukraine peace plan, devised by Steve Witkoff and Vladimir Putin’s envoy Kirill Dmitriev, would meet key Russian demands, forcing Ukraine to cede territory, abandon NATO ambitions and hold elections within 100 days. Brent Crude fell back to $62 a barrel.

Source: Bloomberg

Company News

Yesterday lunchtime, Walmart released results for the three months to 31 October 2025, the third quarter of its financial year to 31 January 2026. The group generated strong sales growth and earnings ahead of market expectations. Full-year guidance was upped again and the company said it will move its stock listing to the Nasdaq. In response, the shares were marked up 4%.

Walmart operates more than 10,800 stores and numerous e-ecommerce websites under 46 banners in 19 countries. In the face of strong competition, the group’s strategy is ‘to lead on price, invest to differentiate on access, be competitive on assortment, and deliver a great experience’. This means the company can often weather economic storms better than others. As the largest importer of container goods in the US, Walmart is heavily exposed to tariffs and has been raising prices in response.

During the three months to the end of October, total revenue increased by 6.0% on a constant currency (CC) basis to $179.7bn, a touch ahead of the market expectation of $177.4bn.

In the US, comparable sales increased by 4.5% (ex-fuel) to $102.7bn, with strong growth in grocery and health & wellness. Growth was made up of a 1.8% increase in transactions (i.e., volume) and 2.7% rise in average ticket (i.e., price). E-Commerce sales grew 28%, led by store-fulfilled pickup & delivery and marketplace. Sam’s Club, the trade business, generated revenue of $23.6bn, up 3.8% in comparable terms (ex-fuel).

Outside of the US, the International business grew by 11.4% at CC to $33.7bn. Global eCommerce sales were up 27%, with growth in each business segment of more than 20%. The Advertising business grew by 53%, including the VIZIO acquisition. Membership and other income was up 9%, including 16.7% growth in membership income globally.

Gross margin rose by two basis points to 24.2%, led by the US, partially offset by International due to the timing of Flipkart's Big Billion Days event. The group kept a tight rein on costs and adjusted operating income rose by 8.0% at CC to $7.2bn. Adjusted EPS was up 6.9% to 62c, beating the market expectation of 60c.

Free cash flow rose by 42% to $8.8bn to leave net debt at $42.5bn. Global inventory was up 3.2% to $64.5bn. Excess cash is returned to shareholders through dividends and buybacks. During the year to date, the group has bought back $7.0bn of its shares, leaving $5.1bn of its $20bn repurchase authorisation. In the last financial year, the dividend was increased by 13% to $0.94, the largest increase in over a decade, equating to a yield of 1%.

Guidance for the financial year to January 2026 has been raised. Consolidated net sales growth is now expected to be 4.8%-5.1% at constant currency (vs. 3.75%-4.75% previously). Operating income growth is now expected to be 4.8%-5.5% including a headwind of 150 basis points from the acquisition of VIZIO and lapping leap year (vs 3.5%-5.5% previously). Adjusted EPS is expected to come in at $2.58-$2.63, versus $2.52-$2.62 previously and the consensus forecast of $2.61.

Source: Bloomberg