US indices in the red ahead of cash open; Dominos not making enough dough

3:49 PM 8 October 2019

Summary:

  • Trade concerns to weigh on US benchmarks

  • US500 (-0.6%) back below 2920

  • Dominos announced earnings miss

 

Hopes for a major breakthrough on the US-China trade front this week are looking increasingly mis-placed after the Trump administration announced overnight that 8 Chinese tech giants would be blacklisted. China are expected to retaliate against the move and these latest developments don’t appear to be the sort that would occur shortly before tangible progress is made.

S&P500 futures are trading firmly lower as trace concerns weigh on sentiment. The market respected the prior swing resistance around 2960 and has traded as low as 2911 so far today. Source: xStation 

 

The release of some second tier data from North America has failed to cause any significant market moves with the latest look at US inflation showing a lower than expected increase. The September PPI Y/Y came in at +1.4% vs +1.8% expected, down from +1.8% previously. This is actually a fairly big miss and the largest decline in 8 months but becuase is often not market moving in itself, traders may now look to Thursday’s more widely followed CPI release. 

 

One stock that will be attracting unwanted attention this afternoon is Dominos Pizza after the firm announced a largely disappointing set of results. Earnings per share for the fiscal 3rd quarter was $2.05 below the Street’s estimate of $2.07. Revenue also missed, coming in a t $820.8M vs 823.9M exp. While net sales rose by 4.4%, this was less than expected.  The pizza chain now expects U.S. same-store sales growth in a range of 2% to 5%, down from a prior range of 3% to 6%. The outlook for international same-store sales growth was slashed from a range of 3% to 6% to a range of 1% to 4%. Shares are called to begin sharply lower with the pre-market trade suggesting a drop somewhere in the region of 6% on the opening bell.

Dominos Pizza looks set to start lower this afternoon with the market still struggling below its 200 day SMA. 221 seen as possible support. Source: xStation  

 

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