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FTSE, Sterling Nervy Ahead Of Wage Growth Data

Published 21/02/2018, 08:30
Updated 21/10/2020, 09:15

The European markets got off to a poor start this morning, following in the footsteps of last night’s Walmart-wrecked Dow Jones.

The FTSE remains momentum less this Wednesday, the index so far spending the week handing back piece after piece of its recent rebound. Today it doesn’t even have the excuse of weak earnings or a strong pound; all 3 of its reporting companies – Barratt Developments (LON:BDEV), Glencore (LON:GLEN) and Lloyds (LON:LLOY) – are in the green, while sterling is down 0.2% against the dollar and flat against the euro.

Beyond the general downturn in sentiment, the FTSE and pound are likely both a bit jittery ahead of the UK’s latest jobs report. As it has been for a while now, wage growth will be the focus; for the 3 months to December the average earnings index is set to remain unchanged at 2.5% (including bonuses), a stubbornness made all the worse by the fact that the country’s inflation is showing little sign of pulling back from a pay-packet eroding 3.0%.

The state of the wage growth data also has implications for the Bank of England’s approach to interest rates; any unforeseen improvement would in theory suggest Britons could cope with higher borrowing costs, adding to the nascent hawkishness of the central bank. Investors will get a chance to assess how rate hike hungry the BoE is this afternoon, when Mark Carney appears in front of Parliament for the inflation report hearings.

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