HL commentary as it happens

Oil markets on edge ahead of Thursday's OPEC+ meeting

Brent crude oil climbed above $72 per barrel as traders await Thursday's OPEC+ meeting, where a delay in planned production increases is widely expected. Signs of recovery in China's factory activity, coupled with Saudi Arabia's anticipated price cuts for Asian buyers, are supporting prices. Meanwhile, escalating tensions in the Middle East, including Syria and renewed Israel-Hezbollah clashes, add a layer of uncertainty to the supply outlook.

US markets enter December with momentum

December is here, and while the famed "Santa rally" doesn't typically kick in until Christmas week, this remains the most likely month for market gains. For US markets, positive economic data - including strong manufacturing and consumer spending - helped kick things off yesterday evening, though rising yields and tariff uncertainty kept investors on edge. Large-cap techs led the charge, but geopolitical tensions and the new US administration are shaping up to be the real drivers in the weeks ahead.

UK retail sales disappoint

UK blue-chip stocks open flat this morning, following news of a 3.4% drop in November retail sales, which ended a four-month growth streak and missed expectations for a 0.7% increase. A late Black Friday, shaky consumer confidence, and Storm Bert's disruptions kept shoppers at home, with every retail category taking a hit. Wales led the slump with a 7.1% drop, while shopping centres bore the brunt of dwindling footfall.

One bright spot though was spending on blockbuster movies, according to Barclaycard. Fans of blockbuster hits Gladiator II, Wicked and Paddington in Peru snapped up seats, driving up cinema spending by more than 22% year-on-year. It’s evidence that if the hits chime well with audiences, a night out at the movies is still a favourite past-time, despite the streaming competition at home.

Retail to be boosted by late deluge of sales from Black Friday promotions

Emails screaming ‘sale almost over’ are clogging up inboxes on Cyber Monday as retailers make a last-ditch attempt to snag a sale. It’s been a super-tough November for the sector, with a Scrooge-like mentality emerging as cost-of-living pressures and worries about the economy took hold.

Accountancy firm BDO estimated that online sales fell 7.8%, while store sales fell 5.5% during the month. However, with three-quarters of people expected to have put off spending until the Black Friday promotional weekend, the signs are that the month ended with a deluge of spending.

The Mastercard pulse survey shows shoppers in the US kept e-commerce tills rising merrily with online sales up more than 14% on Friday, although in-store sales only rose 0.7%. However, due to the discounts offered, it will mean smaller profit margins for retailers at a crucial time of the year.

IoD report indicates a loss of confidence in UK business community

While business confidence appears to be improving in China, the mood among directors in the UK has headed in the opposite direction. According to the IoD, the UK Budget has led to a fresh fall in optimism among bosses, with concerns that they will hold back from investing to expand their businesses as a result.

Some Bank of England policymakers have already indicated they may be more inclined to reducing interest rates only gradually mindful that prices may be pushed up because of the increase in employers’ National Insurance Contributions. In the IoD survey 44% said they planned to pass on the costs to customers, 43% said their workforces would shrink but 50% said they would be less generous with wage increases.

With stubborn pay growth one of the reasons for reticence about reducing rates among some at the Monetary Policy Committee, this niggling worry could subside. But it’s clear a cautious approach in easing monetary policy will be the order of the day.

FTSE 100 trades flat despite signs of China’s manufacturing recovery

The FTSE 100 is lacking in Monday motivation, despite signs that China’s economy is cranking up a gear. Worries are also swirling about investment being curtailed in the UK amid falling business confidence. The snapshot of factory activity, the Caixin China General Manufacturing PMI, rose to 51.1 in November from October’s 50.3, beating expectations, with 50 indicating expansion.

The acceleration of output, selling prices and the strongest growth in foreign orders since February 2023, has lifted spirits. Hopes have risen that the big stimulus programme which started to be rolled out by authorities in September is showing some signs of bearing fruit. Trump’s tariffs could still upset the apple cart though so there’s still a ‘wait and see mood’ lingering. Brent Crude hasn’t moved much and is hovering around $72 a barrel as traders count down to the delayed OPEC+ meeting this week.

Retailers hoping for a wonderful time of the year

We’re deep in the golden quarter for retail with Christmas sales crucial for so many stores and Black Friday spending is expected to surpass last year’s levels on both sides of the pond. However, this mega promotional event is a mixed blessing for retailers. It provokes such shopping mania in the quest for a good deal that around three quarters of people will actually put off spending in the run up to the event. During the promotional period it also means selling at a discount, with means a smaller profit margin at a time when they are being squeezed by rising staff costs. It also puts pressure on their distribution chains, which can cause problems for their reputation in they run into difficulties.

However, given that this year it’s so close to pay day, it looks likely that consumer spend in the UK will surpass last year’s totals. Consumer confidence may still be in negative territory with worries reverberating about the economy, but optimism about personal finances has increased this month, which may also translate into higher sales. Dunelm is one of the retailers offering Black Friday promotions which is positive about spending prospects ahead. There is hope that the increase in the minimum wage will give consumers more incentive to splash the cash, helping the tills ring more merrily in the run-up to Christmas.

Brent Crude heads towards $75 per barrel

Brent Crude slid back below $73 and is now closing in on the $72 mark as traders weigh up the likelihood of OPEC+ lifting the lid on production cuts at its deferred meeting, which is now set to take place next Thursday. An unexpected build in US gasoline inventories is also weighing on prices. The Israel-Hezbollah ceasefire offers some hope that production in the region won’t be threatened. But given the fragility of the truce, there remains potential for tension to escalate again.

Japanese stocks slide after strong inflation print

Japanese stocks had a bumpier ride overnight as expectations for a rate hike by the Bank of Japan firm up after a hotter than expected inflation print. Markets are now pricing in over a 60% chance that headline interest rates will be raised at December’s meeting in Tokyo. That’s in stark contrast to continuing hopes of a US rate cut in December. The opposing monetary conditions either side of the Pacific have pushed the Japanese currency to a six-week high at around 150 Yen per dollar. US futures are pointing to a broadly positive start when markets re-open for a half day on Friday reflecting broad indications that the American economy still has plenty to be thankful for.

FTSE flat at the open

The FTSE has held onto modest gains earned earlier this week, with few cues to take from global markets after the US took a breather to gather for Thanksgiving. Retail stocks will be on traders’ minds today as shoppers trawl the aisles and their screens for Black Friday bargains.

Oil prices slip on higher US petrol stockpiles

Oil prices have dipped in early trading, with Brent crude slipping below $73 per barrel after a surprise jump in US petrol stockpiles cast a shadow over demand. The 3.3-million-barrel rise far outpaced forecasts, even as US crude inventories fell more than expected, highlighting a mixed picture for the market. All eyes now turn to the OPEC+ meeting, postponed to 5 December, with speculation that the delay reflects either extended negotiations for a deeper production cut or ongoing challenges in reaching a consensus.

European markets open higher

European markets have opened higher this morning, as investors aim to shake off yesterday's losses and digest key economic updates, including inflation data from Germany and Spain. Business confidence figures from Italy and Spain are also on the radar, although earnings take a backseat, with no major reports scheduled. Across the pond, US stocks ended mostly in the red after a mixed session, with economic data offering no surprises, but keeping next week's ISM manufacturing figures firmly in focus.