Today’s UK opening call provides an update on:
- Thin trading volumes as US traders opt for long weekend following Thanksgiving holiday;
- Retailers in focus as Black Friday gets underway;
- Eurozone CPI and unemployment followed very closely this morning;
- UK consumers feeling less confident for a second consecutive month;
- S&P been very busy this morning, Netherlands loses AAA rating.
European indices are expected to open slightly lower on Friday, ahead of what is likely to be a relatively quiet end to the week.
Trading volumes are expected to recovery slightly today, after US markets closed on Thursday for Thanksgiving. They’re still likely to be lower than normal though, with many traders in the US opting to turn the Thanksgiving holiday into a long weekend and take full advantage of the Black Friday sales.
Black Friday should bring retailers to the fore today. Any indication that the recent drop in consumer sentiment in the US is encouraging them to avoid these sales could be seen as a sign that Christmas sales as a whole will be disappointing. Given the popularity of Black Friday in the past, this seems unlikely, but investors will certainly be watching this with interest throughout the day.
In Europe we have a large number of economic releases scheduled for Friday, although many of them are low or medium impact releases, so are unlikely to have any significant impact on the markets. The key release this morning will be the eurozone CPI and unemployment figures, although some will argue that the importance of the former has been reduced by the ECBs decision to cut interest rates earlier this month.
However, should we see another significant dip, it would raise the possibility of the ECB adopting negative deposit rates in the coming months, which would be very negative for the euro but positive for European stocks. As for the unemployment rate, this is expected to remain at record high levels of 12.2%, although given the recent volatility in this figure I wouldn’t be surprised to see some movement here.
Aside from these figures, we also have German retail sales, French consumer sentiment, UK Nationwide house prices and UK net lending to individuals figures being released. These should all be of interest to investors, although the impact on the markets will probably be minimal.
The UK has already been in the spotlight this morning, with the release of the Gfk consumer confidence for November. The figure dipped for a second month, to -12 from -11, which may raise early alarms about the sustainable of the recovery being seen in the UK. The consumer has been an extremely important part of the recovery so far and any sign that this is set to change could raise some serious doubts among investors.
S&P, the ratings agency, has been very busy so far this morning. The Netherlands became the latest country to be stripped of its AAA rating, with S&P downgrading it to AA+, outlook stable. Spain on the other hand had its outlook raised to stable, following improvements in the country this year, while its rating was affirmed at BBB-. Cyprus was also on the receiving hand of an upgrade, with its rating being changed to B- from CCC+, outlook stable.
Ahead of the open we expect to see the FTSE down 6 points, the CAC down 8 points and the DAX down 2 points.
About Craig Erlam
Craig Erlam is Market Analyst at Alpari UK. He joined Alpari (UK) at the beginning of 2012 after four years in the financial services industry, including working at Goldman Sachs. Craig writes market commentary that regularly appears on websites including The Financial Times, Reuters, BBC, The Telegraph and FOX Business. He also provides insight and analysis for clients which he posts daily on Twitter and the Alpari (UK) website. You can also find Craig on YouTube where he gives short market updates, including charting analysis.