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Wall Street provides little guidance for Australian investors

PUBLISHED

2023-11-27

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Wall Street offered Australian investors little guidance as they resumed trading today, leaving them with nothing but fond wishes and hopes for retailers.

Futures trading for the ASX 200 saw a 15-point gain by the early Saturday close, adding to Friday's small local gain, which couldn't erase the week's 0.12% loss. Local investors are now looking to midweek economic data on inflation for inspiration rather than retail updates.

Inflation and interest rates remain the primary focus for ASX investors, and the proposed revamp of the Reserve Bank's policy stance by the Federal Labor Government this week adds to that focus and concern.

Retailers will take center stage in the early part of this week as investors await updates on the success of their Black Friday and Cyber Monday sales campaigns, especially with most chains and stores reporting mixed trading results up to the end of October.

On Friday, Wall Street traded in a light holiday half-day session, with the Dow rising as the three major averages - Dow, S&P 500, and Nasdaq - notching a four-week winning streak.

The Dow closed 117.12 points, or 0.33% higher, at 35,390.15 in holiday-shortened trading on Friday. The S&P 500 edged up by just 0.06% to end at 4,559.34, while the Nasdaq lost 0.11% to end at 14,250.85.

For the week, the Dow gained 1.27%, the S&P 500 was up 1%, and the Nasdaq added 0.89%. This marks the fourth consecutive positive week for the major averages, the longest streak for the S&P 500 and Nasdaq since June.

The moves come as Treasury yields hit multi-month lows on Wednesday, raising hopes that inflation is cooling and the Federal Reserve may be done raising rates. The benchmark rate was up 6 basis points at around 4.476% on Friday.

"The market's expectation for the volatility of interest rates is continuing to collapse," according to Scott Ladner, chief investment officer at Horizon Investments. "That's telling us that the market is coming on board finally with this idea that ... 4% to 5% rates is the right level for 2024 across the curve, that the equity market can handle."

In the US, major retail shares rose slightly as Black Friday kicked off the holiday shopping season. Walmart and Target saw gains of 0.9% and 0.74%, respectively, while Amazon edged 0.2% higher.

Burlington Stores, a small clothing chain, ended the week up nearly 27% after jumping 21% on Tuesday due to much better than forecast revenue and earnings for its latest quarter.

However, American Eagle (down 16% over the week), Urban Outfitters (down 14%), and Guess (down 12%) saw sharp falls after disappointing results.

According to Adobe Analytics, consumers spent $6 billion on Thanksgiving Day, with a 5.5% increase compared to the previous year. For the first 23 days of November, online spending reached $76.7 billion, up 6.8% from the same period a year ago. Online sales on Black Friday were expected to rise by 5.7% to $9.6 billion, according to Adobe.

Mastercard's Spendingpulse tracker indicated that US retail sales on Friday rose 2.5% year-over-year, excluding car sales and not adjusted for inflation.

The National Retail Federation of America expects shoppers to spend more this year than last year, but their pace will slow. They forecast a 3% to 4% increase in US holiday sales for November through December, compared with 5.4% growth the previous year, consistent with the average annual holiday increase from 2010 to pre-pandemic 2019, which was 3.6%.

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