- FTSE flat at the open.
- Retailers hoping for a wonderful time of the year.
- Hope builds for a strong housing market in 2025.
- Japanese stocks slide after strong inflation print.
- US Stocks expected to tick up after Thanksgiving pause.
- Brent Crude heads towards $75 per barrel.
Derren Nathan, head of equity research, Hargreaves Lansdown:
“The FTSE has held onto modest gains earned earlier this week, with few cues to take from global markets after the US took a breather to gather for Thanksgiving. Retail stocks will be on traders’ minds today as shoppers trawl the aisles and their screens for Black Friday bargains. More on that below.
Real estate is another sector in focus after the latest Zoopla House Price Index report painted an optimistic picture for sellers in 2025. After prices rose 1.5% in the year to October, it’s expecting a 2.5% bump to prices in 2025 and a 5% rise in volumes. Zoopla’s not forecasting much movement if any in Mortgage rates over 2025 but does think that lenders will have a more relaxed approach to affordability assessments. Activity is likely to be particularly elevated over the coming months as buyers rush to avoid the return of higher stamp duty rates in April. Agreed sales are currently 19% higher than they were 12 months ago.
Japanese stocks had a bumpier ride overnight as expectations for a rate hike by the Bank of Japan firm up after a hotter than expected inflation print. Markets are now pricing in over a 60% chance that headline interest rates will be raised at December’s meeting in Tokyo. That’s in stark contrast to continuing hopes of a US rate cut in December. The opposing monetary conditions either side of the Pacific have pushed the Japanese currency to a six-week high at around 150 Yen per dollar. US futures are pointing to a broadly positive start when markets re-open for a half day on Friday reflecting broad indications that the American economy still has plenty to be thankful for.
Brent Crude slid back below $73 and is now closing in on the $72 mark as traders weigh up the likelihood of OPEC+ lifting the lid on production cuts at its deferred meeting, which is now set to take place next Thursday. An unexpected build in US gasoline inventories is also weighing on prices. The Israel-Hezbollah ceasefire offers some hope that production in the region won’t be threatened. But given the fragility of the truce, there remains potential for tension to escalate again.”
Susannah Streeter head of money and markets, Hargreaves Lansdown:
‘’We’re deep in the golden quarter for retail with Christmas sales crucial for so many stores and Black Friday spending is expected to surpass last year’s levels on both sides of the pond. However, this mega promotional event is a mixed blessing for retailers. It provokes such shopping mania in the quest for a good deal that around three quarters of people will actually put off spending in the run up to the event. During the promotional period it also means selling at a discount, with means a smaller profit margin at a time when they are being squeezed by rising staff costs. It also puts pressure on their distribution chains, which can cause problems for their reputation in they run into difficulties.
However, given that this year it’s so close to pay day, it looks likely that consumer spend in the UK will surpass last year’s totals. Consumer confidence may still be in negative territory with worries reverberating about the economy, but optimism about personal finances has increased this month, which may also translate into higher sales. Dunelm is one of the retailers offering Black Friday promotions which is positive about spending prospects ahead. There is hope that the increase in the minimum wage will give consumers more incentive to splash the cash, helping the tills ring more merrily in the run-up to Christmas.’’
