European stock markets were subdued throughout the session on Friday as retailers attempted to lure in shoppers with a flurry of Black Friday offers.
In London, the FTSE 100 (^FTSE) rose 0.3% by the end of the day, with housebuilders acting as a drag on the index after a survey showed that first-time buyers favour renting over buying.
It also came as analysts at Bank of America’s global research said they expect 2023 to be the most challenging year for UK house builders since the 2008 global financial crisis.
According to the Centre for Economics and Business Research (Cebr), discounts are unlikely to save struggling retailers on the high street as consumers cut back spending by around £1.5bn ($1.8bn) in the last quarter of this year.
Springboard said on Friday that total footfall at noon was 4.6% higher than last year on an annual basis, but more than 22% lower than in 2019 — the last Black Friday before the pandemic.
“Black Friday may struggle to keep businesses in the black, given that it is expected to be considerably less exuberant than previous years," Victoria Scholar, head of investment at Interactive Investor said.
"Pressures from the cost of living crisis and rising mortgage rates are squeezing household budgets, leaving less left over for retail spending this festive season. More than half of consumers are expected to cut back on Christmas shopping this year, with less extravagant spending on food, drinks and gifts.
"Many families are opting for Secret Santa with a strict budget limit to minimise the amount of pounds each person needs to spend. Individuals and families across Britain are facing a perfect storm this year when it comes to making ends meet with the soaring cost of food, energy, and rent."
Meanwhile, German gross domestic product (GDP) expanded by 0.4% in the period between July-September, up from an earlier estimate of 0.3%.
Growth was driven by government and private consumption, easing the fears of a recession, while net exports and the construction sector were drag on growth.
Consumer confidence in Europe’s largest economy also rose to -40.2 heading to December compared to -41.9 in November. However, this was worse than market expectations for -39.6 as negative sentiment eases slightly thanks to the government’s energy support.
Treasuries rose as trading resumed after the Thanksgiving holiday while the dollar headed for a fourth day of losses against the pound (GBPUSD=X). Wall Street will be reopening for a half-day on Friday.
The advance of US stock futures followed commentary from Federal Reserve officials that supported the case for a slower pace of interest-rate increases.
Russ Mould, investment director at AJ Bell, said: “Investors might not realise it, but we’ve just had an important week in terms of the potential direction of markets going forward. Signs that the Federal Reserve might slow down the pace of interest rate hikes is the first step towards the pivot in strategy desired by so many investors."
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Overnight, Asian equities closed mostly lower amid the subdued tone in markets after the holiday in the US.
Hong Kong-listed technology stocks led declines in Chinese shares as investors weighed recent gains against a rise in COVID-19 infections and lockdown-like restrictions affecting parts of Beijing.