KUALA LUMPUR, MALAYSIA – Media OutReach – November 24, 2023 – As Black Friday approaches, global broker FBS looks at the relationship between the biggest sales season of the year and its impact on financial markets. FBS analysts particularly discover the trends of the world’s largest economy, the American one. They analyzed the reactions of assets and macroeconomic conditions to better understand the impact of Black Friday.
FBS comments on the reaction of financial markets to Black Friday
What influences Black Friday numbers
FBS Analysts highlight three essential indicators to assess the impact of Black Friday on the American economy: the number of buyers, the average amount spent and total spending.
Over the past 18 years, 2012, 2017, 2019, 2020 and 2022 were particularly successful in terms of total spending, when collective spending by U.S. consumers exceeded $60 billion on average.
When it comes to the number of shoppers, the period after the subprime crisis, from 2010 to 2014, was the most active, with the number of US Black Friday shoppers regularly exceeding 200 million. As FBS analysts point out, a correlation with the Federal Reserve’s key interest rate is evident: the rate reached a low of 0.25% in 2010 and pushed Americans to participate in Black Friday sales. The next consumption spike was spotted after the COVID crisis, as the Fed eased the key again, pushing Black Friday numbers up to 190 and 186 million in 2019 and 2020, respectively. This was due to the increased liquidity of the system.
Notably, the year 2022 deviated from the previously established trend. Despite the 4% policy rate, approximately 197.6 million Americans shopped on Black Friday and collectively spent more than $64 billion. FBS financial market analysts attribute this phenomenon to significant market liquidity and increased opportunities for consumers.
How financial markets react to Black Friday
To understand how financial markets reacted to Black Friday, FBS looked at how the S&P 500 index and a separate S&P consumer sector index performed from 2005 to 2022. Surprisingly, the market reacted more to the reports sales than on Black Friday, with a mainly negative reaction (66% of cases) observed in the S&P 500 index after the publication of the report.
FBS analysts note in particular that some companies, mainly in the consumer sector, are showing negative reactions to the Black Friday reports. Notable examples include Amazon, Nike and Home Depot.
Market expectations
Given the current macroeconomic situation, FBS analysts anticipate a potential slowdown in sales dynamics this Black Friday, which could disappoint the retail sector. However, the influence of Black Friday is not limited to the retail sector but extends its impact to the broader stock market. FBS advises paying attention to the final figures for a comprehensive analysis of the global market situation. A decline in consumer spending can signal an economic slowdown.
Disclaimer: This material does not constitute a call for trading, trading advice or a recommendation and is intended for informational purposes only.
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