Fears that rising costs may cause the global economy to stagnate have sent stock markets in Asia and the United States plummeting.
After disappointing earnings announcements from some of the country’s largest retailers, US stocks dropped the most in a single day since 2020.
Target said profits had almost halved year over year due to unexpectedly increased fuel and freight costs.
That followed a similarly gloomy update from Walmart earlier in the day.
In Asian morning trade, Japan’s Nikkei index was down 2.6 percent, while Hong Kong’s Hang Seng was down 3.3 percent.
The Dow Jones Industrial Average fell 3.5 percent, and the S&P 500 index, which monitors shares of a wide range of America’s largest corporations, fell more than 4%.
The Nasdaq, dominated by technology, fell 4.7 percent.The losses came on top of weeks of losses in US financial markets.
Target’s stock dropped 25% after the announcement, the greatest drop in more than three decades.
Target and Walmart’s releases were closely monitored for indicators of how consumer spending in the world’s largest economy is holding up as inflation reached 40-year highs.
Although official US government data recently showed a robust 0.9 percent increase in retail sales in April, several analysts have warned that the figures, which are not adjusted for inflation, may understate signs of slowing — particularly for lower-income people.
Amazon announced a surprising decline in online sales in the first three months of this year earlier this year.
In the three months leading up to May, Target stated sales at shops open for at least a year were up more than 3% compared to 2021. However, CEOs claim that when costs rise, buyers are spending more on necessities and less on luxury items like televisions and clothing.
It told investors that fuel and freight costs would be $1 billion higher than expected this year. According to the company, supply chain challenges will not be relieved until at least 2023.