By Geoffrey Smith
Investing.com — It’s the first COVID-free Black Friday in three years, and research points to a healthy rebound in sales on Main Street, despite the challenge of high inflation. China is easing its monetary policy a little more to ease the plight of its real estate sector. The German economy grew a little more than initially thought in the third quarter and the sharp decline in confidence across Europe appears to have bottomed out. Elon Musk announces blanket amnesty for suspended Twitter accounts but has his hands full of recalls at Tesla. And the EU simply cannot agree on proposed price caps for natural gas and Russian oil. Here’s what you need to know in financial markets on Friday, November 25.
1. China eases monetary policy again
China’s central bank eased monetary policy again, the latest in a series of official attempts this week to shore up a financial system struggling with the implosion of a housing credit bubble.
The People’s Bank of China announced that it would cut the reserve requirement rate for most banks by 25 basis points, freeing up about 500 billion yuan ($1 = 7.1664 yuan) of liquidity for the economy. It comes after major state-owned banks announced they would offer nearly $200 billion in new credit to the sector.
The PBoC has been reluctant to ease policy too much this year, but recent developments in , which have eased over the year, have given it more leeway to open the liquidity taps.
2. Black Friday benefits Main Street, not online sellers
The first post-COVID Black Friday in three years should reaffirm the primacy of physical stores over online shopping, if only for a day.
Mastercard (NYSE:) SpendingPulse expects sales in physical stores to rise 18% from a year ago, while online sales are expected to rise just 3.7%, considerably less than the rate of .
The holidays are a tough test for consumer morale, given the sharp rise in travel, food and accommodation costs this year. The index released last week was considerably lower than at any time during the pandemic, when generous government support payments and zero interest rates still allowed for seasonal madness.
3. Inventories are expected to rise slightly in the holiday trade; Tesla calls back to the point
US stock markets are expected to open a truncated session a bit later, but it’s hard to see anyone getting too excited about market moves on a day when most participants will still be away from their desks.
As of 6:30 a.m. ET (11:30 a.m. GMT), they were up 72 points or 0.2%, while up a similar amount, and were broadly flat from Tuesday’s close. The main supporting factor remains the key finding from the Federal Reserve on Tuesday, which all but confirmed a shift to lower increases from December.
Stocks likely to be targeted later include Tesla (NASDAQ:), which had to issue its 19th recall of the year due to a software glitch that affected the taillights of some cars. The Chinese regulator has meanwhile ordered the recall of nearly 70,000 Teslas due to problems with their seat belts and a possible battery malfunction.
The reminders mean CEO Elon Musk has more to do after announcing a blanket amnesty for suspended accounts on Twitter (although a notable Ukrainian blogger was suspended after being flagged by various Russian accounts). Musk had said he would not make a decision before convening a special council on lifting the suspensions.
4. Europe is hitting rock bottom – for now
The drip of modestly better news from Europe improved, as German for the third quarter was revised higher and the country’s main consumer confidence index showed new signs of dips.
Europe’s largest economy recorded growth of 0.4% in the three months to September, down from the 0.3% originally forecast, as pent-up travel demand and eased travel bottlenecks Supply chain bottlenecks in the industry helped to mitigate the impact of the sharp rise in energy prices.
The price rose slightly for a second consecutive month, after generous collective wage agreements and the announcement of government measures aimed at capping gas and electricity prices.
There were also big rebounds in Italy and Italy after the reasonably quick formation of a new government, while Spain fell to 25.1% in October from 36.5% in September.
5. EU oil and gas haggling continues
Crude oil prices have rallied overnight, despite signs of a steepening decline in mobility in China as the number of COVID-19 cases hits new records.
As of 6:45 a.m. ET, futures were up 2.4% at $79.81 a barrel, while futures were up 1.7% at $86.83 a barrel.
The European Union remains in disarray over plans to impose price caps on Russian oil exports and wholesale market benchmark prices for . The bloc was forced to postpone a decision on the latter until another meeting in December, after protests from Spain and others that the cap was too high to ever come into effect. The pressure for a lower cap comes largely from countries that don’t have as much fiscal space as Germany to support consumption over the next six months.
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