It’s Black Friday!  

Bet on Financials at Capital Spreads

That’s not a bad thing for the markets but it refers to the biggest shopping day on the planet as 150 million Americans are expected to hit the malls.  This is the time of year when US retailers are due to go into profit as heavy discounting and a public holiday lures consumers in through their doors and for those who can’t get to the shops (presumably the poor people who have to work in the shops that open at unearthly hours of the day), go online on “Cyber Monday” splashing up to $20 billion.  The figures for this US Thanksgiving are expected to break records which comes as a surprise considering the dodgy looking outlook for the economy, but just goes to show that you can’t put the US consumer down and when you tempt them with heavy discounts they look under the back of the sofa to find the cash to get that new television or item of clothing.

At the moment the US economy is still growing and even if it is slower than expected than forecasts only a few months ago, unemployment hasn’t run away with itself.  The consumer is the heart of the US economy with their spending making up some 70%, so if they weren’t to go shopping this week end then the impact would be huge, with a recession looking even more likely.

As Americans splash the cash for their extended week end, European markets continue to suffer under the malaise of the European sovereign debt crisis.  Markets were not best pleased about German Chancellor Merkel’s insistence that the creation of euro bonds are not the answer even though the President of the European Commission himself has been banging the drum calling for them to help settle nerves at least a little.  Even if Germany did give into the idea this would not be the answer to our problems and it would take time to be ratified across all the European nations, further delaying their impact and meanwhile Italian and Spanish bond yield creep ever higher.  Italy’s 10 year is back firmly above 7%, a level which is considered unsustainable.  There are some major European bond auctions in the run up to year end with next week being one of the biggest as France, Italy, Spain and Belgium will all be in the spot light.  If they are anywhere near as poorly subscribed as this week’s German one then we could be in for trouble.

The FTSE is taking the led from Asian markets this morning and with no Dow Jones which is closed for Thanksgiving volumes will be low and there are certainly no expectations for a big move to the upside.  At the time of writing the FTSE is hovering just above 5100, in the red and looking poised to test new recent lows.  Often it is the case that with no US markets to assist with direction European indices just follow their most recent trend, which as we all know has been south.  Having said that US indices have hardly been propping things up!

The euro remains the whipping boy in the FX markets with downside pressure for EUR/USD this morning, albeit not aggressive downside pressure.  The pair is at 1.3300 at the time of writing with support and resistance seen around 1.3275/40 and 1.3410/30 respectively.

Gold is also suffering from this bout of negative sentiment and ever since hedge fund supremo John Paulson started selling large chunks of his gold exposure the precious metal seems to have lost its shine.  At the time of writing the yellow brick is trading at 1684 and near term support and resistance is seen at 1680/67 and 1712/25 respectively.

For Brent things have also been difficult for the bulls and this morning the black stuff is at 107.40 having spent the last few days hovering around these levels.  Near term support and resistance is seen at 106.85/15 and 108.60/109.40 respectively.