Stocks slide as Black Friday retail period begins

(Alliance News) - Stock prices in London opened in the red on Friday, on a day of lighter trading volumes owing to the US Thanksgiving holiday period.

The FTSE 100 index opened down 28.39 points, 0.4%, at 7,455.19. The FTSE 250 was down 27.60 points, 0.2%, at 18,453.23, and the AIM All-Share was down 1.45 points, 0.2%, at 716.63.

The Cboe UK 100 was down 0.4% at 744.41, the Cboe UK 250 was down 0.1% at 15,960.76, and the Cboe Small Companies was down 0.2% at 13,468.79.

In European equities, the CAC 40 in Paris was marginally higher, while the DAX 40 in Frankfurt was down 0.1%.

In some positive news for retailers amid the key Black Friday weekend and the run-up to Christmas, UK consumer confidence has bounced back in November.

This comes despite the ongoing cost-of-living concerns as consumers look set to "loosen their purse strings" and enjoy the festive season.

GfK's long-running consumer confidence index rose by six points, although it still languishes firmly at minus 24. Confidence in the general economy over the next 12 months also increased by six points to minus 26 – 32 points higher than a year ago.

"Since the data were collected prior to October [consumer price index] inflation coming in below expectations and the [national insurance contribution] cuts being announced in the autumn statement, confidence may show a further rise in the December report," said Lloyds Bank.

In the US on Thursday, financial markets were closed for the Thanksgiving holiday. They will reopen for a shortened session on Friday.

"Economic releases on the manufacturing and service sectors will provide some interest, as will any early indications from retailers on the success or otherwise of the traditional Black Friday spending spree," said interactive investor's Richard Hunter.

US PMI data is due at 14.45 GMT, while retailers are expected to see record levels of traffic over the Black Friday-Cyber Monday period.

Forecasters expect heavy consumer traffic. The National Retail Federation predicts more than 182 million consumers will shop in stores and online over the shopping weekend.

That turnout – equal to more than half the US population – would top by 16 million last year's level and constitute a record since the trade group began tracking the period in 2017.

Markdowns are expected to be especially deep, reflecting the pressure stores are under to lure US consumers jaded by still-high inflation for some goods and lingering effects from Covid pandemic upheaval.

In the FTSE 100, Legal & General edged up 0.4% after agreeing to a GBP4.8 billion full buy-in for the Boots Pension Scheme.

"[The transaction] secures the benefits of all 53,000 retirees and deferred members of the scheme, making it the UK's largest single transaction of its kind by premium size and, for L&G, the largest single transaction by number of members," the firm explains. It said the deal builds on an over 20-year relationship with the beauty retailer and pharmacy chain.

L&G said in the business year to date, it has written GBP13.4 billion of global pension risk transfer, with the market especially strong in the UK which is seeing "unprecedented demand" due to rising pension funding ratios.

Meanwhile, Sage Group was among the index's worst performers, down 1.5%. Canaccord cut the stock of the entreprise software firm to 'sell' from hold'

Team17 plunged 30% on AIM, after issuing an unexpected profit warning.

The indie video game and educational app developer said it believes it is "well positioned with strong traction across its new release and back catalogue titles" ahead of the Black Friday and Christmas trading periods. It now expects revenue in 2023 to be "modestly ahead" of current market expectations.

However, Team17 warned of some titles underperforming and project overspends. It now expects full-year adjusted earnings before interest, tax, depreciation and amortisation of at least GBP28.5 million, including non-cash title impairments of up to GBP11.5 million. In 2022, it achieved an adjusted Ebitda of GBP48.8 million.

Sterling was quoted at USD1.2534 early Friday, slightly lower than USD1.2542 at the London equities close on Thursday. The euro traded at USD1.0912, edging up from USD1.0909.

Gold was quoted at USD1,993.63 an ounce early Friday, a touch higher than USD1,992.02 on Thursday.

Brent oil was trading at USD81.43 a barrel, up from USD80.65. Oil prices were regaining composure after dropping following the unexplained postponement of the Opec+ meeting. The key ministerial gathering of the oil-producing alliance was pushed back from Sunday to next Thursday.

"Our commodities team notes that the ongoing disagreement between members will likely increase volatility within the market over the course of the next week, although it is unclear how this will affect broader policy," said Dutch bank ING.

Developments in the Middle East could also affect the trajectory of oil prices, as the four-day truce between Israel and Hamas begins.

During the truce, Gaza's ruling Hamas group pledged to free at least 50 of the about 240 hostages it and other militants took in their October 7 attack on Israel. In turn, Israel is to free three Palestinian prisoners for each released hostage. The releases are to take place in stages over the next four days.

"However, both sides suggest that the pause is temporary, and fighting has continued leading up to the truce," noted RMB Market analysts.

In Asia on Friday, the Nikkei 225 index in Tokyo closed up 0.6%, amid inflation data and flash PMIs.

Japanese consumer inflation quickened to 2.9% year-on-year in October as the government reduced subsidies for electricity and gas bills, government data showed.

The figure for the world's third-largest economy, which excludes volatile fresh food prices, followed a 2.8% on-year jump in prices in September. "The drop in electricity and city gas bills shrank although the rise of gasoline prices narrowed," a statement accompanying the data release said. The reading was slightly below market expectations of a 3.0% increase in a Bloomberg survey.

Against the yen, the dollar was quoted at JPY149.42 early Friday, down versus JPY149.49 late Thursday.

Meanwhile, Japan's business activity levels stagnated in November, according to preliminary survey data.

The au Jibun Bank flash composite purchasing managers' index fell to 50.0 points this month from 50.5 in October. The 50-point mark separates contraction from expansion, showing the country's private sector saw no growth over the month. The flash services PMI edged up to 51.7 from 51.6, while the flash manufacturing PMI fell to 48.1 from 48.7.

In China, the Shanghai Composite closed down 0.7%, while the Hang Seng index in Hong Kong was down 2.0%. The S&P/ASX 200 in Sydney closed up 0.2%.

By Elizabeth Winter, Alliance News deputy news editor

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