Proactive Investors -
- FTSE 100 down 125 points
- DS Smith accepts takeover bid
- Supercry to delist
Wage growth skews rate cut hopes on unemployment data
Raised hopes of looming interest rate cuts on news of higher than anticipated UK unemployment were clouded by data showing wage growth remained strong on Tuesday.
Headline wage growth sat at 5.6% between December and February, ONS data showed in the morning.
Excluding bonuses, wage growth came in at 6%, ahead of market expectations for a deeper decline to 5.8%.
“This wasn’t what the Monetary Policy Committee wanted to see,” Deutsche analysts point out, as members mull over the right time to cut base interest.
The data came alongside unemployment figures, showing a rate of 4.2% between December and February, above analysts’ expectations for 4%.
Though the figures suggested signs of slowing UK economic growth, analysts said the continued high wage growth could fuel inflation.
“On the back of this data, the market is now not expecting the first rate cut to come until August,” XTB’s Kathleen Brooks said.
“Stubborn wage growth has reduced the chance of a June rate cut,” she added, with markets now pricing in one cut this year and estimating high chances for a second.
Wise falls as revenue disappoints
Wise PLC (LON:WISEa) shares fell almost 8% after reporting full-year revenue below analysts’ expectations.
Revenue for the fourth quarter came in 24% higher at £277.2 million, taking the full-year figure to £1.05 billion, the foreign exchange company reported on Tuesday.
However, this was 1% below consensus estimates, Peel Hunt (LON:PEEL) analysts said, as fourth-quarter volume growth of 14% to £30.6 billion was also slower than expected.
“Given the strong run Wise has had in recent months,” Peel Hunt said the “slight miss on revenues” was likely to weigh on the share price... Read more
The morning so far
There was a lot to digest on the company news front this morning, starting with DS Smith agreeing to a £5.8 billion takeover offer from US packaging giant International Paper.
It serves as a snub to domestic bidding rival Mondi PLC (LON:MNDI), though at 415p per share, DS Smith’s board was duty bound to accept the better offer.
Perhaps surprisingly, DS Smith shares fell 2.4% on opening exchanges, though stocks are in the doldrums across the board as tensions between Iran and Israel continue to flare up.
British clothing brand Superdry bit the bullet and announced that it is leaving the London Stock Exchange.
Superdry shares have tanked this year, with sales falling and losses piling higher after a disappointing Christmas trading season. The group announced an equity raise in tandem with the delisting and the stock plummeted a further 30%.
Dr Martens’ boss Kenny Wilson said he’s leaving the business three years after seeing the iconic British footwear brand go public in the US.
"After six years in the role, I feel that the time is right to hand over this year, and I am excited that Ije will be my successor,” said Wilson.
Dr Martens’ shares have collapsed nearly 90% since its January 2021 IPO, with the stock plunging to new lows following a tough Christmas 2023 trading period.
A trading update today has not helped sentiment.
On the macroeconomic front, the UK unemployment for December to February came in hot at 4.2%, overshooting market consensus of a flat 4%.
The higher-than-anticipated numbers will be highlighted by dovish policymakers as a sign that the UK economy is cooling and therefore the first interest rate cut can get serious consideration.
The FTSE 100 is currently down 115 points to 7,850.