This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
With the increasing hints of recovery with the US economy, there are expectations that this year will be one of the best holiday seasons for retailers in years.
Falling unemployment, rising wages, and lower gas prices will have helped raise household budgets and consumer sentiment.
Just earlier this month, e-commerce giant Alibaba reported more than $9 billion in sales on Singles' Day in China. The shopping day on Tuesday 11 November is similar to Cyber Monday where heavily discounted goods are offered online.
In the week prior to the event, shopping action was taking place on the stock market as investors snapped shares of Chinese e-commerce companies such as Alibaba, JD.com, and Vipshop. Alibaba’s stock price climbed over 16%, JD.com saw an 8% rise, while Vipshop was up 7%.
As traders sold on the news, it was not a surprise to see a pullback in stock prices for many of these companies. For example, Alibaba dropped 3.87% on Tuesday 11 November after six-straight days of gains.
Matching Singles’ Day?
Not just limited to US companies, Black Friday/Cyber Monday weekend will once again be another excuse for global e-commerce sites to hawk discounted deals. We’re seeing some similar patterns from Singles’ Day emerging in the US and China e-commerce stocks.
Alibaba and Amazon are among companies with share prices edging up over the past week. This suggests a similar momentum building up as we head into the event, and a possible ‘sell on the news’ effect.
This is likely to present a sell opportunity for short-term traders on the day of the event. Conversely, longer-term investors bullish on the e-commerce sector can watch out for a pullback to support levels for an entry.