It’ll be fascinating to witness at what price USA markets finally open on Friday and how they perform. The futures market for the DJIA roared ahead on Thursday, despite the thanksgiving holiday in the USA, meaning markets were closed. Currently at 19,118 on the futures market at 12am London (GMT) time, analysts and investors will now be considering when and where this run will end, now that the so called “Santa Rally” is also in sight.
It’s Black Friday in the USA, when retailers try to entice over stuffed holiday shoppers from their homes, after their Thursday over indulgent binge, with massive in store (and increasingly online) discounts.
The term Black Friday is misunderstood. The most common myth is that, after an entire year of operating at a loss (in the red), stores finally earn a profit (going into the black), on the day after Thanksgiving, because holiday shoppers blow so much money on heavily discounted merchandise. This version of Black Friday’s origin is the logical, but inaccurate story behind the tradition.
The first recorded use of the phrase “Black Friday” wasn’t related to holiday shopping, but to a financial crisis; the crash of the U.S. gold market on September 24th, 1869. Two Wall Street financiers, Jay Gould and Jim Fisk, conspired to corner the market on gold, hoping to then sell at enormous profit. On that Friday in September, the conspiracy was unveiled, the stock market crash which ensued bankrupted many investors, from Wall Street barons to farmers.
On the subject of gold it’s endured a significant correction over recent weeks, gold has now fallen to its lowest level since February, at $1183 per ounce at 12am London time. Whilst industrial metals, such as nickel and copper, have made substantial gains. Copper gained as much as 3.8% in Thursday’s trading sessions, whilst zinc reached an eight year high. Both commodities gaining from the commitment, by the USA president elect, to create a fiscal infrastructure spending bonanza and to bring back jobs and production to the USA, once he takes up the office.
WTI oil price remained relatively static, Iraq’s prime minister said the country will cut output as part of an OPEC deal, but Russia stated it will only agree to a freeze. Currency markets were benign throughout the day, due to the absence of USA trading activity creating very little in the way of trading volume.
European markets enjoyed positive gains on Thursday, the CAC closing up 0.29%, the DAX up 0.25% and the U.K. FTSE 100 finishing the day up 0.17%. German GDP figures came in as expected at 0.2% for the quarter, as the German IFO business confidence index also remained steady at 110, whilst UK mortgage approvals rose. Japanese shares had risen on Thursday, whilst futures on the Nikkei index suggested a positive session on open.
Looking towards medium to high impact news releases and events today, it’s possibly sterling and the greenback that’ll be the focus of attention in Friday’s trading sessions. the UK GDP (second estimate) figures, are released by the ONS at 9.30am UK time. The expectation is for a quarterly reading of 0.5%, to keep the UK target above 2% GDP growth, year on year. Any major divergence from this reading could see instantaneous price action on cable and sterling’s other major currency peers.
There is a raft of other releases related to this main ONS data release. Most notably data on: imports, exports, services etc., business investment in particular will be watched intently, due to the Brexit referendum decision potentially harming production and also investment decisions. The preliminary investment reading was 1.0%, the expectation is for a fall to -0.2%.
At 13.30pm UK time we’ll get the figures for the USA advanced trade balance. The expectation is for a slight rise to -$60 billion, the USA imports far more than it exports and due to seasonal factors the reading is likely to have risen, whilst the inventories build up will also reflect seasonal retailing activity, probably revealing a modest rise to 0.3%.
In the final data releases of the week, Markit PMIs for the USA are published. As always, any figure above the 50 line indicates expansion; services PMI is expected to come in at a figure similar to the previous reading of 54.8, with the composite PMI figure expected to come in at a similar 54.9.