LCG Market Wrap: Muted volumes, Black Friday, Amazon & Ocado – Jasper Lawler, Head of Research

 

10:08am GMT | November 29th 2019

European markets have opened slightly lower on Friday while futures point to little change on Wall Street for a half-day trading session after Thanksgiving. Currency and commodity markets are flat.

Muted trading volumes around Thanksgiving and some fatigue from trade headlines meant the MSCI World index has just missed out on reaching record highs. That could change if US markets pick up where they left off with fresh records for the Dow & S&P 500.

Black Friday & Amazon

It is more than the online videos of scrums outside American shopping malls. Black Friday also serves as an interesting datapoint on health and trends for consumers. In Europe, which has only adopted Black Friday in the past few years, scepticism seems to be rising about the value offered by Black Friday deals. That scepticism potentially adds a downside skew to the sales figures. Nonetheless if consumers are feeling optimistic and have some disposable funds, spending at retailers should still get a healthy spike. Rising Black Friday sales, all else considered is a good thing for the global growth picture.

As with all things retail these days, all eyes will be on Amazon. Last year Amazon reported Cyber Monday as its single biggest shopping day ever. The record-setting sales will need to continue for Amazon to reach the $80 billion to $86.5billion fourth quarter revenue guidance it has given investors. Projecting past sales growth forwards, there is no reason to doubt Amazon can have another blowout Black Friday – and record-breaking holiday season. There is clearly some optimism they can do it since Amazon shares have gained 4.5% in just the last five days, reaching a two-month high.

Ocado scores another big supermarket partnership

Shares of Ocado are making double-digit percentage gains on news of a partnership with Japan’s biggest supermarket Aeon Co. This just goes further in cementing Ocado’s place as a technology service provider after its previous deals in the US and Europe. This is the UK firm’s biggest foray into Asia and we’d expect the continent to be a big target for future growth. The huge jump in the shares today is not just about the extra sales from Japan. It is about the multiple investors are willing to pay for a high growth tech firm over a retailer. The more tech deals Ocado can ink, the higher we would expect its P/E ratio to go.

Half an eye on next week: OPEC & NFP

With trade volumes down after the US holiday, investors probably have half-an eye on some big events next week. The semi-annual OPEC meeting and the latest US jobs figures will be the blockbusters. There are also rate decisions in Australia and Canada as well as PMIs from China, Europe and the US.

US opening calls

S&P 500 to open 6 points lower at 3,147

Dow Jones to open 72 points lower at 28,092

Contact: Jasper Lawler, Head of Research

Twitter: @jasperlawler

Email: jasper.lawler@lcg.com

Tel: 0207 456 7086

Available via Globelynx

Financial Markets and Political Commentary

 

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About the author

Jasper delivers regular commentary, seminars and webinars on market news, trading analysis, strategy and psychology. He is regularly interviewed by BBC News, Bloomberg, CNBC and Sky News, and has featured in The Times, Guardian and Daily Telegraph. Jasper hosts a weekly charting analysis webinar. He is qualified as a Chartered Market Technician (CMT) with the Market Technician Association, and has a degree in Finance and Economics.