Wall Street has made a mixed start to trading, following Thursday’s Thanksgiving break.
The Dow Jones industrial average has gained 0.25%, or almost 90 points to 34,283 points.
DIY group Home Depot are leading the risers, up 1.4%, but Apple have dropped almsot 2% following reports that iPhone production at Foxconn’s factory in China’s city of Zhengzhou could fall at least 30%, due to worker protests (see details here).
Shopper numbers at UK retailers are sharply below 2019 levels, despite an increase compared to last year.
Data provider Springboard reports that retail footfall was 7.3% higher this morning than last Friday, suggesting Black Friday bargains have lured some shoppers out. Shopping centres were almost busier, while high streets only recorded around 4% more visitors that last week.
On an annual basis, total footfall by noon was 4.6% higher than last year, but over 22% lower than in 2019 – the last Black Friday before the pandemic.
So while electronic transactions may be a third higher than in 2019, according to Nationwide, fewer people are visiting retail outlets.
That reflects the impact of the cost of living squeeze, but also the move towards home working – meaning fewer people will be nipping out of the office to shop.
Diane Wehrle, insights director at Springboard, says shopping centres are the Black Friday winners so far.
Shoppers are heading to large city centres rather than smaller high streets, with footfall in Central London +11.1% higher than last week and +7.7% higher in city centres across the UK compared with a drop in footfall from last week of -3.2% in market towns.
The footfall data demonstrates that whilst trading conditions are challenging Black Friday is certainly not a disaster.
Springboard expect footfall to strengthen this afternoon as those consumers who are working from home go shopping after lunch.
The dry and sunny weather will also help drive up activity, as will the UK vs USA World Cup match this evening as shoppers may well head into towns and cities and do some shopping and then watch the match from bars in town centres.”
The worker unrest at Foxconn’s plant in China could reportedly weigh on Apple’s November iPhone shipments with full production yet to resume until the end of the month.
Victoria Scholar, head of investment at Interactive Investor, explains:
Apple has been battling with China’s draconian zero-tolerance to Covid approach to try to combat its record high infection levels. This has been having a negative impact on China’s exports with many businesses moving their factories to other Asian economies instead.
More broadly, it is weighing on China’s growth outlook, which when coupled with its embattled real estate sector and the regulatory threat to its tech sector could suggest China is past its peak.
This is likely to have negative reverberations for global GDP as China is a key trading partner to the world.
As we covered earlier, the People’s Bank of China cut its reserve requirement ratio (RRR) by 0.25 percentage points this morning to try to bolster demand and kickstart growth and offset some of the pressures from covid lockdowns and its property crisis.
Apple’s shares are trying lower by nearly 1% ahead of the US market open as stocks prepare to play catch-up after the Thanksgiving holiday.
Although Apple is down 17% year-to-date, it has outperformed some of the other tech giants like Meta and Amazon which are nursing heavier losses of 66% and 45% respectively.
Apple is still viewed as one of the more resilient stocks in the tech sector with fiscal fourth quarter earnings and revenue topping Wall Street’s expectations in October. However, Apple continues to hold off from providing official guidance given the macroeconomic uncertainty.
UK retailers appear to have seen a steady, if muted Black Friday morning.
Updated figures from Nationwide show that its members had made 16% more transactions than on a typical Friday by noon – still 7% more than last year.
Mark Nalder, Director of Payment Strategy at Nationwide Building Society says:
Historically this period has been the peak time for spending as people search for bargains either online on the high street during their lunch break.
“For the first time ever we also have a winter World Cup, which will continue to boost spending figures throughout the day – especially when England take on the USA later this evening.”
Elsewhere in the world economy, Mexico has continued to grow despite the pressures from higher interest rate and the global slowdown.
Mexico’s GDP rose by 0.9% in the third quarter of 2022, with growth led by the primary sector (such as mining and agriculture).
The good news for consumers is that retailers have been compelled to offer steep discounts to lure shoppers.
That, though, will eat into profit margins at a normally lucrative time of the year.
In fact, retailers across Europe fear the overall Christmas trading season could be the worst in at least a decade.
US retailers Target Corp, Macy’s and Best Buy have all warned of steeper discounts this November and December than in the previous two years. More here.
Black Friday may offer an opportunity to bag a bargain ahead of the festive period, but many shoppers will be expecting retailers to cut prices more than usual.
The worsening cost-of-living crisis means shoppers in the UK and continental Europe will be determined to find solid reductions.
Research from Boston Consulting Group has found that shoppers in Europe plan to spend almost one-fifth less during this year’s annual discount period, due to the squeeze from inflation.
UK consumers are set to cut back by the greatest margin in the region, spending 18% less, while those in France and Germany both plan to reduce their spend by 15% and Spain by 13%.
US shoppers expect to spend around 6% more, though. More here.
There has been a marked slowdown in the UK housing market since the mini-budget in September, an estate agent group has warned.
LSL Property Services told shareholders that market conditions have been more challenging than previously expected, following a strong first-half of the financial year.
It said the mortgage and housing markets had being disrupted by political uncertainty and sharply increasing interest rates.
Across the market, this has given rise to a reduction in mortgage activity and new house sales, and an increase in fall-throughs of previously agreed sales.
Shares in LSL have fallen 11% – dragging on the housebuilding sector too.
Over in France, members of the CGT union have been demonstrating at Amazon’s logistics center in Bretigny-sur-Orge, near Paris, as part of the global day of action.
They put up a banner reading “En grève pour nos salaires”, which means “On strike for our wages”.
Britain’s cost-of-living crisis is hurting those in the most deprived areas hardest, new official data shows.
People living in the most deprived areas in England are more likely to be cutting back on food and essentials (58%) compared with those living in the least deprived areas (33%).
They’re also much more likely to have fallen behind paying their energy bills, and less likely to have invested in energy efficiency improvements.
Although not a surprise, it highlights how poorest households need help to get them though the worst cost of living squeeze in decade.
The Office for National Statistics also found that the vast majority of adults in the UK reported seeing the price of their food shop rise over the past month.
The volume of UK Black Friday payment transactions by 10am was broadly in line with 2021, initial data from Barclaycard Payments shows (via Reuters).
Marc Pettican, head of Barclaycard Payments, said.
“Our data shows that Black Friday is off to a steady start this year, despite the challenging economic backdrop.