Shares in companies that own and manage US shopping malls and other
retail properties dropped on Tuesday, the fourth-straight decline, amid
mounting anxiety over disappointing sales at department stores and
clothing retailers.
The S&P 500 retail real estate investment trust index dropped 1.9 per cent on Tuesday, and has tumbled 6 per cent since the end of trade last Wednesday.
The seven groups listed on the benchmark have collectively shed $7.2bn in market value over the period, according to Bloomberg data.
The current decline deepens the fall for retail Reits over the past 12 months to 23 per cent, compared with a 3 per cent drop for the wider Reits industry. The broader market has risen 16.2 per cent over the past year.
Investors have been fixated on a string of sales misses in recent days disclosed by the best-known US department stores, such as Macy’s, Kohl’s and JC Penney.
Wall Street’s gloomy sentiment intensified on Tuesday, when TJX Cos, a discount retailer that has tended to buck the troubles of retailers, disclosed its weakest like-for-like sales growth since 2015, along with a disappointing outlook. Dick’s Sporting Goods, a speciality retailer, also posted a sales miss.
In a sign of the rising jitters, shares in Simon Property Group, the biggest US mall operator, have slid 7 per cent since last Wednesday to $154.13.
Meanwhile, the cost to insure Simon’s debt against default has ticked higher. Credit default swaps that are used by investors to hedge holdings of the company’s bonds were the worst performers on Tuesday in an index compiled by Markit that tracks such derivatives on investment-grade companies.
The spread on Simon’s five-year CDS was 107.7 basis points on Tuesday, up from 94.5bp last Wednesday, Bloomberg data show. The group is rated in the single A range by S&P, Moody’s and Fitch.
Despite the dim sentiment, however, Ross Smotrich, an analyst at Barclays, said this week that Simon’s management appeared to be doing a good job at dodging the retail industry’s troubles.
The S&P 500 retail real estate investment trust index dropped 1.9 per cent on Tuesday, and has tumbled 6 per cent since the end of trade last Wednesday.
The seven groups listed on the benchmark have collectively shed $7.2bn in market value over the period, according to Bloomberg data.
The current decline deepens the fall for retail Reits over the past 12 months to 23 per cent, compared with a 3 per cent drop for the wider Reits industry. The broader market has risen 16.2 per cent over the past year.
Investors have been fixated on a string of sales misses in recent days disclosed by the best-known US department stores, such as Macy’s, Kohl’s and JC Penney.
Wall Street’s gloomy sentiment intensified on Tuesday, when TJX Cos, a discount retailer that has tended to buck the troubles of retailers, disclosed its weakest like-for-like sales growth since 2015, along with a disappointing outlook. Dick’s Sporting Goods, a speciality retailer, also posted a sales miss.
In a sign of the rising jitters, shares in Simon Property Group, the biggest US mall operator, have slid 7 per cent since last Wednesday to $154.13.
Meanwhile, the cost to insure Simon’s debt against default has ticked higher. Credit default swaps that are used by investors to hedge holdings of the company’s bonds were the worst performers on Tuesday in an index compiled by Markit that tracks such derivatives on investment-grade companies.
The spread on Simon’s five-year CDS was 107.7 basis points on Tuesday, up from 94.5bp last Wednesday, Bloomberg data show. The group is rated in the single A range by S&P, Moody’s and Fitch.
Despite the dim sentiment, however, Ross Smotrich, an analyst at Barclays, said this week that Simon’s management appeared to be doing a good job at dodging the retail industry’s troubles.
“Given the current
environment of increased store closures, we believe the stability
underlying [Simon’s] operating metrics speaks to the company’s ability
to effectively manage the industry’s current headwinds,” he said.
Elsewhere, shares in Pfizer, the world’s largest standalone drugmaker, fell by 1.6 per cent to $32.60, after Citibank issued a scathing note warning that the group would miss profit forecasts in the absence of a large deal.
Andrew Baum, the widely-followed Citi analyst, downgraded the pharmaceuticals group from “neutral” to “sell” and reduced its earnings estimates by between 5 and 10 per cent for the 2018-22 period.
“Pfizer needs a deal to deliver consensus earnings per share,” Mr Baum wrote.
Mr Baum said that Bristol-Myers Squibb and Allergan — which Pfizer tried and failed to buy last year — were the most likely targets, but warned that any deal carried a “major transaction risk” for the company.
Looking at the broader market, the S&P 500 slipped 0.1 per cent to 2,400.7, having ticked up to a record intraday high earlier. The Nasdaq Composite edged up by 0.3 per cent to 6,169.9, while the Dow Jones Industrial Average was little changed at 20,979.8.
Elsewhere, shares in Pfizer, the world’s largest standalone drugmaker, fell by 1.6 per cent to $32.60, after Citibank issued a scathing note warning that the group would miss profit forecasts in the absence of a large deal.
Andrew Baum, the widely-followed Citi analyst, downgraded the pharmaceuticals group from “neutral” to “sell” and reduced its earnings estimates by between 5 and 10 per cent for the 2018-22 period.
“Pfizer needs a deal to deliver consensus earnings per share,” Mr Baum wrote.
Mr Baum said that Bristol-Myers Squibb and Allergan — which Pfizer tried and failed to buy last year — were the most likely targets, but warned that any deal carried a “major transaction risk” for the company.
Looking at the broader market, the S&P 500 slipped 0.1 per cent to 2,400.7, having ticked up to a record intraday high earlier. The Nasdaq Composite edged up by 0.3 per cent to 6,169.9, while the Dow Jones Industrial Average was little changed at 20,979.8.
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