Kogan fell 8.4 per cent after the online retailer said its New Zealand e-commerce site Mighty Ape “continues to be impacted by technical challenges” from a bungled website platform update that have hit its sales, and warned that the business won’t return to profits until next financial year.
On Wall Street overnight, benchmark indexes recovered from an initial jolt after the latest reminder that the US government may be hurtling toward an unsustainable mountain of debt.
The S&P 500 edged up by 0.1 per cent after Moody became the last of the three major credit-rating agencies to say the US federal government no longer deserves a top-tier “Aaa” rating. The Dow Jones added 0.3 per cent, and the Nasdaq composite inched up by less than 0.1 per cent.
Moody’s pointed to how the US government continues to borrow more and more money to pay for its expenses, with political bickering making it difficult to either rein in Washington’s spending or raise its revenue to get its ballooning debt under more control.
They’re serious problems, but nothing Moody’s said is new, and critics have been railing against Washington’s inability to control its debt for many years. Standard & Poor’s lowered its US credit rating in 2011.
Because the issues are so well known already, investors have likely already accounted for them, according to Brian Rehling, head of global fixed income strategy at Wells Fargo Investment Institute.
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Stocks and US government bond prices at first fell sharply early on Wall Street in Monday’s trading, but they trimmed their losses as the day progressed. The S&P 500 went from a loss of 1.1 per cent to a modest gain of 0.2 per cent before drifting through the afternoon.
The move by Moody’s essentially warns investors globally not to lend to the US government at such low interest rates, and the yield on the 10-year Treasury briefly jumped above 4.55 per cent early on Monday morning, up sharply from 4.43 per cent late Friday.
The downgrade by Moody’s comes ahead of a tense period for Washington, where it’s set to debate potential cuts in tax rates that could suck away more revenue, as well as the nation’s limit on how much it can borrow.
If Washington has to pay more in interest to borrow cash to pay its bills, that could filter out and cause interest rates to rise for US households and businesses too, in everything from mortgage rates to auto loan rates to credit cards. That in turn could slow the economy.
The downgrade adds to a long list of concerns that have already weighed on the market. Chief among them is Donald Trump’s trade war, which itself has forced investors globally to question whether the US bond market and the US dollar still deserve their reputations as some of the safest places to park cash during a crisis.
The US economy seems to be holding up OK so far despite the pressures of tariffs, and hopes are high that Trump will eventually relent on his tariffs after striking trade deals with other countries. That’s a major reason the S&P 500 has rallied back within 3 per cent of its all-time high after falling roughly 20 per cent below that market last month.
But big companies have been warning recently they’re uncertain about the future. Walmart, for example, said recently that it will likely have to raise prices because of tariffs. That caused Trump over the weekend to criticise Walmart and demand it and China “eat the tariffs.”
with AP, Bloomberg
