Is Black Friday an opportunity for traders?

Late November every year, market participants await the exceptional Black Friday as an event that keeps the economy moving but at the same time keeps the stock markets ringing. If you are a consumer, you are looking for ways to satisfy your personal taste for goods. If you are a business owner you are probably looking to create valuable offers that will invite more clients to buy your merchandise or services. From a trading perspective we will be looking for the most tactful strategy to place orders and benefit from market swings possibly making the case for an interesting session with plenty opportunities. This report will cover some exciting facts surrounding the much anticipated upcoming Black Friday.

We must start by saying that this event has this magic ability of motivating millions and millions of consumers, even if they have been inactive as shoppers for the previous months. Even if the majority of these millions of consumers don’t really have necessity for a specific item, they are still most probably to come up with a reason to search for deals that they can benefit from. In this case however, the benefit is not only on the side of the consumer, but also on the side on the business. The event allows for businesses to create bundles of products to be able to serve and satisfy larger crowds of consumers. This objective will also enable businesses to get rid of products that had been mounting on their shelves for some time. With these circumstances, shops can entice consumers to buy more products/services at better prices. As a first choice, we turn our focus to retailer sellers like Amazon, Walmart and Ali Baba which are expected to place a storm of deals with lower prices on thousands of products for consumers to be able to choose among. Big tech giants like Apple are also expected to be in the markets focus as their products are very attractive and can come under tremendous demand even with small price decreases. Companies like Facebook and Google can also be among the companies to make gains as more businesses can use their platforms for advertising purposes. Yet in our opinion, no matter what sector a business is operating within, if they have developed their online purchasing capabilities to a satisfactory level, they can easily benefit from the event. We must note however that the quality and quantity of the products available must be considered here. At this stage companies like Nike, Home Depot, are also expected to be of interest to consumers.

However, at the moment the question in everyone’s mind is what will be the consumer’s reaction this year, as the pandemic is still ongoing, affecting the economy’s performance? Supply chain disturbances globally are in our opinion a matter that could overshadow consumer demand compared to previous years. At the same time, supply chain issues have pushed inflation higher and products prices could remain elevated even in a Black Friday environment. In this case consumers may have to wait until the Christmas season to get bundle deals worth buying. On the contrary, an effect derived from the pandemic that could counter the supply chain issues, is the amount of excess cash that most consumers have saved during the pandemic.

Moreover, Black Friday in most countries of the world, has been an event that consumers would look forward to physically going down to the shops and spending most of their hours there. Sadly, Europe and other parts of the world are undergoing a new wave of cases that could impact the event negatively. In addition, it may be challenging to predict how consumers may react to the upcoming event, as the uncertainty over the length of the economic recovery seems to persist for the time being.

In our view, traders should approach the market with extra caution on the specific day and the days before and after. Other events that are imminent nearby Black Friday are the US Thanks Giving holiday on Thursday and the following Cyber Monday. A good metric for traders to make decisions is to observe the major stock indexes reaction upon the opening, while focusing on currency indexes can also be helpful in this case. Traders can also focus on the results derived from the Black Friday event especially considering the sales in terms of money and consumers.

If you have any general queries or comments relating to this article please send an email directly to our Research team at research_team@ironfx.com
Disclaimer:
This information is not considered as investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced, or hyperlinked, in this communication.

Share: