Interactive Investor

Must read: FTSE 100 latest, Black Friday, UK consumer confidence

Our head of investment rounds up the morning's big news.

24th November 2023 08:51

by Victoria Scholar from interactive investor

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      GLOBAL MARKETS

      Amid quieter global volumes over the Thanksgiving holiday in the US, European markets have opened mostly lower to round up the week. The FTSE 100 is under pressure after it closed higher on Thursday driven by rising energy stocks.

      According to Reuters, Barclays (LSE:BARC) is reportedly looking to save up to £1 billion via cost cuts, which could result in 2,000 job losses at the British lender, but shares have hardly moved. 

      Overnight, Japan’s inflation rate hit a three-month high in October at 3.3%, up from 3% in the previous month. And Japan’s manufacturing PMI fell to 48.1 in November, down from 48.7 in October.

      BLACK FRIDAY 

      According to PwC, UK spending this Black Friday is expected to drop to £5.6 billion versus £7.1 billion last year, a decrease of more than 20%. Interest in the event from shoppers has also slumped from 61% last year to 44% this year. 

      This year, the timing of Black Friday doesn’t bode well for the retailers given that it falls ahead of payday when workers’ purse strings are typically much tighter. Given that retailers have been heavily discounting items already this year to try to boost spending in response to sluggish demand, consumers are suffering from ‘discount fatigue’ by this point in the year, to the detriment of Black Friday and Cyber Monday. 

      According to Accenture, almost two thirds of UK adults are planning to spend less this Christmas, a trend that will likely weigh on Black Friday too. The survey also found that more than half of UK adults would not take part in Black Friday, Cyber Monday, or Boxing Day sales. 

      For the increasing number of price sensitive consumers, second-hand retailers are likely to benefit as shoppers go bargain hunting for deals in charity shops and on platforms such as eBay and Vinted. More and more retailers are opening up their own second-hand clothing and rental departments to benefit from this shift.

      UK CONSUMER CONFIDENCE 

      UK GfK consumer confidence rose to -24 in November, up from a three-month low of -30 in October and ahead of expectations for -28. This was the biggest month-on-month improvement in confidence since March to April. Consumers’ outlook for their personal finances improved by five points to -3 and their 12-month economic outlook increased from -32 to -26. 

      Consumer confidence has picked up considerably in November thanks to strong wage growth, falling inflation, and monetary tightening which has potentially reached its peak. However, by historic standards consumer confidence is still low, weighed down by broader pressures of a sluggish economic backdrop, prices which are generally still much higher than they were before the pandemic, increased personal taxes, and expensive mortgages, rents and other bills, contributing to the squeeze on household budgets during the seasonally expensive run up to Christmas.

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