- Black Friday weekend begins amid warnings the cost-of-living crisis will dampen sales
- FTSE100 expected to end the week on a calm note
- UK car industry returns to growth
- Chinese demand concerns mean Brent Crude is expected to end the week lower at $85 a barrel
Sophie Lund-Yates, Lead Equity Analyst at Hargreaves Lansdown:
“Britons are expected to spend £8.7bn over the Black Friday weekend, but there’s a very real chance the cost-of-living crisis will dampen sales. This comes as a real blow for retailers. This is their third Christmas facing weaker consumer behaviour. There’s a broader awareness these days that not all Black Friday deals are great value, meaning the sale-factor might not be enough to pull in struggling consumers. To entice more customers, retailers may find themselves discounting more heavily than usual too. While this can increase transaction volumes, it can wreak havoc on profits, especially in today’s world when businesses are already grappling with a mushrooming cost base. For those areas of the high street and online that will see a boost over the next couple of days, it’s likely this will be a pull-forward of spending from other times rather than an extra source of revenue overall. Particularly when you look to the US where spending power is being held up by savings and credit, and it quickly becomes clear that consumer discretionary spending will not be sustainable by the time we’re into the new year.
The Thanksgiving holiday in the US and relatively muted slate of market news in the UK means the FTSE100 is broadly expected to end the week on a calm note. That’s despite the ongoing concerns about consumer sentiment and economic growth. As we enter a traditionally quieter time of year, the next time we’re likely to see sharp share price moves is when we hear the Christmas trading updates from the retailers in January. This will give a clear indication of how conservative the UK consumer has become amid the challenging economic environment.
UK car production has returned to growth, with 69,524 cars built in October, up 7.4% on the same month last year. More than eight out of every 10 cars were made to export, and over half headed to the EU. The production of electric and hybrid vehicles also rose sharply- a clear indication that sentiment towards lower-carbon living is continuing to increase in importance for UK households. Ultimately though, overall production is still well below pre-pandemic levels. The sector continues to grapple with supply chain problems, including around chip availability.
Continued concerns about demand in China amid soaring coronavirus cases means Brent Crude is expected to end the week lower, at $85 a barrel. There are palpable concerns that Chinese authorities will reintroduce widespread restrictions which would severely dent economic activity. At the same time, there are reports of a high price cap by G7 nations on Russian oil, which has further eased supply worries. The net effect of a weak demand profile and better supply is downwards pressure on the oil price.”
