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Black Friday Effect – FBS Comments on Financial Markets Behavior During Sales Season

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BANGKOK, THAILAND 24 November 2023 – As Black Friday approaches, global broker FBS delves into the relationship between the year’s biggest sales season and its impact on the financial markets. The FBS analysts particularly discover the trends of the world’s largest economy – the American. They analyzed reactions across assets and macroeconomic conditions to understand the Black Friday impact better.

FBS comments on how financial markets react to Black Friday
FBS comments on how financial markets react to Black Friday

What influences the Black Friday numbers
FBS analysts highlight three critical indicators for gauging Black Friday’s impact on the US economy: the number of buyers, the average amount spent, and the total spending.

Over the past 18 years, notably successful in terms of total spending were 2012, 2017, 2019, 2020, and 2022, when the collective expenses of American consumers exceeded $60 billion on average.

Regarding the number of buyers, the period after the subprime mortgage crisis, from 2010 to 2014, was the most active, with the number of American Black Friday shoppers consistently surpassing 200 million. As FBS analysts point out, a correlation with the Federal Reserve’s key interest rate is evident – the rate reached a minimum of 0.25% in 2010 and pushed Americans to participate in Black Friday sales. The following consumer peak was spotted after the COVID crisis, as the Fed had eased the key again, leading to Black Friday numbers soaring to 190 and 186 million in 2019 and 2020, respectively. This was a result of the increased liquidity in the system.

Notably, 2022 deviated from the previously established trend. Despite the 4% key rate, around 197.6 million Americans did their Black Friday shopping and collectively spent over $64 billion. FBS financial market analysts attribute this phenomenon to substantial market liquidity and increased consumer opportunities.

How financial markets react to Black Friday
To understand how financial markets reacted to Black Friday, FBS examined the movement of the S&P 500 index and a separate S&P consumer sector index from 2005 to 2022. Surprisingly, the market reacted more to sales reports than Black Friday, with a predominantly adverse reaction (66% of cases) observed in the S&P 500 index after the report was published.

FBS analysts particularly note that Individual companies, primarily in the consumer sector, exhibit adverse reactions to Black Friday reports. Notable examples include Amazon, Nike, and Home Depot.

Market Expectations
Considering the current macroeconomic situation, FBS analysts anticipate a potential slowdown in sales momentum this Black Friday, which could disappoint the retail sector. However, Black Friday’s influence is not confined to the retail sector but extends its impact to the broader stock market. FBS advises paying attention to the final numbers for the comprehensive global market situation analysis. A decline in consumer spending may signal an economic slowdown.

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