Black Friday should shake up the US markets and encourage the blue chip companies expanding gains towards fresh all-time highs.
The shopping-mania will be enhanced by the recent rise in inflation expectations due to a hawkish Fed.
Online commerce businesses will be under close watch, as half of Black Friday sales are expected to occur online. Higher volumes and greater volatility are expected, especially on retailers’ and e-commerce giants’ stock prices, such as Amazon (NASDAQ:AMZN), Alibaba (NYSE:BABA) and Walmart (NYSE:WMT).
Nonetheless, traders should also be prepared for downside risks, given that Black Friday has already been broadly priced in. In the dirt of major surprises in volumes, the trading scheme could well turn into a buy-the-rumour-sell-the-fact, given that the oversold conditions in US equity markets hint at a correction sooner rather than later.
Equally in the UK, the sharp depreciation in the pound since the Brexit referendum, rising import prices, hence higher inflation expectations, would encourage UK shoppers to take advantage of the cyber event to binge-shop before prices climb higher.
In the UK, Black Friday sales are expected to top analysts’ estimates (£2 billion) and sum up to £4 billion once the weekend and the Cyber Monday are included.
The FTSE opened upbeat. Non-cyclical consumer staples are leading gains (+0.41%), while the UK’s major retailers trade with mixed appetite:
Tesco (LON:TSCO) (+0.54%), Marks and Spencer Group PLC (LON:MKS) (+0.12%), WM Morrison Supermarkets PLC (LON:MRW) (-0.05%) and J Sainsbury PLC (LON:SBRY) (-0.68%)
Investors remain on the sell-side in gold miners’ stocks. Randgold Resources (LON:RRS) (-0.52%) and Fresnillo (LON:FRES) (-0.56%) remain under decent selling pressure as option traders became the most pessimistic on gold prices since July 2015. Rising hedging trades against cheaper gold additionally weigh on the yellow metal’s value, the ounce of gold extended losses to $1171 (major 61.8% retracement on Dec’15 to Jul’16 rise).