How Could Black Friday Impact The Markets?
Welcome back to another week in trading. Q4 is now in full swing and that means the holiday season is nearly upon us. For retailers (and savvy traders) that can mean an upturn in fortunes. Read on to find out everything you need to know about the impact that Black Friday (November 24) could have on the markets.
What is Black Friday?
Oh, don’t act like you don’t know! Black Friday is one of the most hotly anticipated shopping days of the year, for both consumers and investors.
Why? Well, many big-name retailers offer heavy discounts on their products, and that sends consumers cray cray in search of a bargain worthy of shouting about.
In the background of all that craziness are investors, speculating on the brands that could perform the best. Others will be eagerly wading through the sales data to gauge the overall health of the retail sector and the economy as a whole.
How can Black Friday affect the markets
The financial market impact of Black Friday tends to be short-term, but it can be significant and potentially very profitable for traders who put their eggs in the right basket.
In the days leading up to Black Friday, retail stocks often see a nice bump, as investors anticipate strong sales. It’s worth noting that the wider stock market’s performance on Black Friday is generally pretty mixed.
Over the past two decades, the S&P 500 has gained and lost an equal number of times on Black Friday. Make of that what you will.
It’s all about the economy
Just how well the retail sector does on this day comes down to the state of the economy at the time. Fairly logically, this sector fluctuates massively depending on the freedom and comfort that people feel they have to spend their hard-earned cash.
If the market is struggling, people tend to want to save and retail companies need to massively invest in discount offers to entice any kind of bite from consumers. Likewise, in a strong economy, people are happier to spend a little more freely. For that reason, Black Market sales data is a fairly good yardstick for investors to judge the health of the economy.
Stocks that could rise
Retailers that are expected to benefit from strong sales are a good bet. This is especially true of retailers that sell gift items like clothing, electronics, and toys.
Some stocks to look out for include:
● Amazon (AMZN)
● Walmart (WMT)
● Target (TGT)
● Costco (COST)
● Best Buy (BBY)
● Gap (GPS)
Stocks that could dive
Vice-versa, retailers who don’t sell such items may suffer a dip. Companies whose principal products are in the luxury goods or home furnishings sectors are particularly liable to suffer a drop. They’re simply not a priority for shoppers and don’t tend to discount their goods so much.
Some stocks that could dip include:
● Nordstrom (JWN)
● Tiffany & Co. (TIF)
● Coach (COH)
● Michael Kors (KORS)
● Ralph Lauren (RL)
● Staples (SPLS)
Predictions for 2023
Take them or leave them, here are a few predictions for the upcoming Black Friday.
Some analysts are predicting that sales this year will be strong. Consumers are expected to have more money (and inclination) to spend on holiday gifts.
After scouring the forums, we’ve found the following more specific predictions:
● Total Black Friday sales could exceed $100 billion for the first time.
● Online sales will account for more than half of all Black Friday sales.
● The most popular Black Friday deals will be on electronics, clothing, and toys.
● Consumers will start shopping for Black Friday deals earlier than ever before.
Are you trading Black Friday?
Have you made any serious gains on previous Black Fridays? Perhaps you have some cool tips. Tell us your story over at @_contentworks.
Top fundamental events week commencing 30.10.23
Here’s what’s coming up in a very quiet week in the markets.
Monday
No specific events are planned.
Tuesday
● CNY — Chinese Balance of Trade
● AUD — RBA Interest Rate Decision
Wednesday
No specific events are planned.
Thursday
No specific events are planned.
Friday
● GBP — Manufacturing Production MoM; Manufacturing Production YoY; GDP MoM; GDP Growth Rate YoY Prel; GDP Growth Rate QoQ Prel
● USD — University of Michigan Consumer Sentiment Index
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Speak soon!
The Contentworks team
