With the UK jobs report on the way the FTSE continued to suffer in the shadow of sterling’s September rise.
The FTSE plunged more than 50 points after the bell, swiftly falling to a 7350-grazing near one week low. The miners have all moved lower, while BP (LON:BP) and Shell (LON:RDSa) are both down half a percent. However, the main reason for the UK index’s decline was the pound’s latest climb. Though only up 0.2%, that takes cable to a fresh, $1.33-plus one-year peak; it has also risen 0.1% against the euro, cementing a 6-week high.
The next big test for the pound will be this morning’s jobs report. The unemployment rate is set to remain unchanged at 4.4%, while the claimant count change is expected to jump from -4.2k to 0.8k month-on-month. Most importantly, wage growth for the 3 months to the end of July is forecast to hit 2.3% – an improvement June’s 2.1% reading, but still a fair whack below July’s 2.6% inflation figure.
It’ll be interesting to see how sterling reacts to the wage growth data. While any improvements will help mitigate fears about the sharp fall in real wages, a weak reading would put more pressure on the Bank of England to try and curb inflation with a rate hike.
Over in the eurozone the DAX and CAC were relatively muted, slipping 0.2% and 0.1% respectively. In terms of data, the main item on the region’s agenda is the industrial production figure, which is expected to recover from June’s -0.6% with a 0.1% reading in July.
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