Major retailer Wesfarmers is forecasting a tough year ahead with sales down due to COVID-19 lockdowns, while the Australian share market has closed down as investor optimism wanes. 

The benchmark ASX 200 fell 0.1 per cent to 7,448, while the broader All Ordinaries slipped 0.2 per cent to 7,760.

Wesfarmers expects a slower year ahead 

Wesfarmers shares closed 2.8 per per cent lower at $62.17 after the conglomerate foreshadowed a difficult year ahead.

The company has posted a 16.2 per cent increase in full year underlying net profit to $2.42 billion.

Revenue rose 10 per cent to $33.9 billion as a booming property market in the country shored up demand for hardware products at Bunnings.

Sales at Bunnings, Kmart and Officeworks all grew last financial year.

However, Wesfarmers pointed to a drop in sales across its brands this financial year due to lockdowns in New South Wales and Victoria. 

Bunnings sales have fallen 4.7 per cent since July, Kmart and Target sales are down 14.7 per cent and Officeworks sales have dropped 1.5 per cent.

CEO Rob Scott said the company would continue to pay permanent and many casual staff who can't work due to lockdowns or because they need to self-isolate until at least the end of December. 

Wesfarmers' final dividend was lowered by 5 cents to 90 cents a share.

It also announced a $2.3 billion capital return to shareholders.

Retail sales fall 

Wesfarmers' warning comes as retail sales fell nationally in July, down 2.7 per cent.

It is the largest monthly drop this year and follows a 1.8 per cent fall in June, when lockdowns started to bite. 

"This was the largest fall of any state and territory since August 2020."

The largest falls were in cafes, restaurants and takeaway food services (-12.3 per cent), clothing, footwear and personal accessory retailing (-15.4 per cent), and department stores (-11.4 per cent). 

Food retailing (+2.3 per cent) saw the largest rise, while other retailing (+0.6 per cent) that includes online sales also rose.

CBA analyst Ryan Felsman said lockdowns were not the only problem for retail.

ASX slips 

Miners, tech and cyclicals stocks dragged the market down. 

The world's biggest rare earths miner outside China, Lynas Rare Earths hit a more than one-week high on a record full-year profit, before skidding up to 4.4 per cent.

Bottom movers were Pilbara Minerals (-6.5pc), Appen (-5.5pc), Orocobre (-5.2pc), NextDC (-5.1pc) and Nanosonics (-4pc). 

The top movers were Clinuvel Pharmaceuticals (+17.9pc), Atalas Arteria (+6.7pc), Blackmores (+6.1pc), Nuix (+4.3pc) and Hub24 (+3.5pc). 

Jackson Hole and Afghanistan worry Wall Street

The Australian dollar dropped 0.5 per cent overnight to 72.41 US cents.

The benchmark S&P 500 slid half a per cent to 4,469, the Dow Jones Industrial Average also fell 0.5 per cent to 4,469, while the tech-heavy Nasdaq Composite slipped 0.6 per cent to 14,945. 

Real estate was the only sector to gain on the S&P 500 index, with energy stocks suffering the biggest losses. 

Supply chain issues and delayed school purchases hurt retailers. 

Shares of discount stores Dollar Street and Dollar General plummeted 11 per cent and 4 per cent respectively, after reporting disappointing quarterly results. 

Abercrombie & Finch fell 10.5 per cent. 

Salesforce shares rose 3 per cent, as the shift to a hybrid work model is expected to fuel demand. 

Zoom Video rose 1.6 per cent, while NetApp jumped 4.7 per cent as brokerages raised their price targets on the back of strong earnings results.

Worries over bond tapering and Afghanistan

The sell-off on Wall Street followed commentary from several members of the US Federal Reserve who called for speeding up the tapering of asset purchases.

The US Federal Reserve is holding its annual symposium at Jackson Hole, Wyoming. The big event is Federal Reserve Chairman Jerome Powell's speech.

Robert Kaplan, who is a non-voting member of the US Federal Open Markets Committee, said he believed the slowdown of bond asset purchases should begin in October. 

Analysts said investors were also reacting to the Kabul airport bombing.

"Kaplan's statements caused a little confusion about the taper timeline, but in my opinion the equity markets are focused on geopolitical issues," said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors.

"I am surprised the market hasn't fallen more, given the fear that it could take focus away from [US President Joe Biden's] domestic agenda," Ms Horneman added.

Mixed economic data also added to the negative mood on Wall Street.

Applications for unemployment in the US jumped by 4,000 to 353,000, while claims for ongoing support fell by 2.9 million. Second-quarter GDP growth revised to 6.6 per cent rate and consumer spending slowed down.

Commodities mixed

Iron ore rose 2.9 per cent to $US152.92.

US oil rose 1.6 per cent to $US68.52 a barrel and Brent crude oil gained 1.5 per cent to $US72.15.

Spot gold was up and selling for $US1,804 an ounce at 4:30pm AEST.

The Australian dollar was up a quarter of a per cent to 72.52 US cents.

European markets down

In Europe, stock markets closed in the red. 

The FTSE 100 index fell 0.3 per cent to 7,124, the DAX slipped 0.4 per cent to 15,793, while the STOX 500 dropped 0.4 per cent to 470.34. 

ABC/Reuters