Weak Black Friday sales send Dow lower

Heading into the close the FTSE 100 is down 80 points, at 6642, as mineral stocks sink the London market. 

A sale sign in a shop window
Source: Bloomberg

Mineral stocks lead FTSE lower

In London, the FTSE 100 is paying the price for its relatively high proportion of natural resource stocks. Despite the turnaround in the underlying commodities themselves, the mineral-exposed companies are the biggest losers today.

These challenging times for commodity companies will see a shakeup in the sector; extractions costs are high and markets prices are low, which spells trouble for the industry. I foresee profit warnings for the small oil explorers and miners will be forced to rethink some of their more ambitious projects.

European equities are relatively shielded from major moves in the commodities market but traders don’t want to be short going into the ECB’s meeting on Thursday,  for fear of yet another QE clue being dropped from Mario Draghi.

Black Friday sales weigh on retailers 

In the US, the Dow Jones is down 49 points at 17,778 as a double digit drop in Black Friday sales ensured US retailers had a Black Monday! Starting off the US shopping season on a negative note does not instil confidence in the run up to Christmas.

Wal-Mart and Target are both licking their wounds today.

Traders are instead holding out hope for Cyber Monday.

Apple shares are off over 2% as dealers take note of the brutal Black Friday numbers.

Commodities bounceback

The commodities complex has staged a bounceback today. Brent oil bottomed out early this morning and the move higher is showing no signs of letting up, but the energy still has a long way to go before it gets back to the pre-OPEC meeting level.

Copper swung from the red into the black as the final HSBC survey confirmed that China’s manufacturing is teetering between contraction and expansion. The official survey from Beijing showed a minor expansion on the month but traders put more weight in the HSBC report.

Gold is charging towards $1200, a level it has found difficult to crack lately. If the precious metal wants to avoid posting a second consecutive annual loss, it must comfortably  clear that mark.

Sterling rallies

The euro continues to take advantage of the pullback in the US dollar.

The slip in German manufacturing is a sign of what is to come, as the powerhouse of the eurozone registered a decline in manufacturing in November, and traders will be keeping an eye out for further cracks in the strongest economy in Europe.

Thursday’s ECB meeting will reveal whether Mr Draghi is a man of his word or if he will be the boy who cried QE.

Sterling rallied as the UK manufacturing sector impressed traders on two fronts; not only was October’s reading revised higher but November’s rate of expansion sped up. 

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. 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. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.