The FTSE was higher on Tuesday despite wages rising at the fastest pace on record outside of the pandemic. Photo: AP Photo/Alberto Pezzali
FTSE 100 and European stocks
European stock markets closed in on data showing record wage growth across the UK, taking overnight gains on Wall Street and Asia.
The FTSE (^FTSE) rose 0.3% after the open in London, with a boost from mining stocks, while the CAC (^FCHI) climbed 0.7% in Paris, and the Frankfurt DAX (^GDAXI) was 0.5% higher.
It comes as wages have grown at the fastest pace on record outside the pandemic but still lag behind inflation.
Traders are betting that the Bank of England (BoE) will raise interest rates to 5.75% by the end of the year to control rising inflation. The markets have paid the full price for the 0.25 percentage point hike in the next three meetings of the Monetary Policy Committee.
Elsewhere, online trading platform CMC Markets (CMCX.L) dropped 5% after reporting a decline in first-quarter net operating income.
Meanwhile, UK housebuilder Bellway (BWY.L) warned of a further recession as rising mortgage rates and pressure from the cost of living suppressed demand in the property sector.
Richard Hunter, head of markets at Interactive Investor, said: “The latest quarter has seen a continued improvement in sales demand, particularly compared to the previous quarter and largely traditional seasonal interest is expected to increase.
“However, while the quarter on quarter picture is good, a year on year comparison shows that the scale of the sector’s challenges is palpable with a 25% drop in overall reservation rates.”
Read more: Confidence in supermarkets at nine-year low
America and Asia market
Asian shares tracked Wall Street’s higher close on Tuesday after the People’s Bank of China (PBOC) slashed short-term lending rates for the first time in 10 months.
In Japan, the Nikkei (^N225) rose 1.8% on the day, while the Hang Seng (^HSI) rose 0.7% in Hong Kong and the Shanghai Composite (000001.SS) 0.15%.
Wall Street closed higher ahead of this afternoon’s US consumer price inflation report, pushing the S&P 500 (^GSPC) to its highest level in more than a year. The index closed up 40.07 points, or 0.9%, at 4,338.93.
The Dow Jones Industrial Average (^DJI) rose 0.6% on the day, while the tech-heavy Nasdaq Composite (^IXIC) climbed 1.5%.
View: How does inflation affect interest rates?
pound
The pound (GBPUSD=X) rose 0.46% to 1.2571 against the US dollar as investors hoped for a pause in the Federal Reserve’s cycle of rising interest rates on Wednesday. Against the euro, sterling (GBPEUR=X) was 0.05% higher at 1.1637.
oil market
In commodities, the upward momentum in oil prices continued. US crude oil, or West Texas Intermediate (CL=F) was trading up 0.66% at $67.56 a barrel, while Brent crude (BZ=F) rose 0.92% to $72.50.
Read more: Interest rates and oil prices: how one affects the other
economic data
UK wages rose at the fastest pace on record outside the COVID pandemic period, according to the Office for National Statistics (ONS) on Tuesday.
Regular pay excluding bonuses rose 7.2% in the three months to April, up from 6.7% reported in March.
The figure was ahead of economists’ forecast of 6.9% and higher than the upwardly revised 6.8% in the previous three months.
Real wages including bonuses fell 2%, down from 3% in January to March.
Wages were boosted by a 9.7% increase in the minimum wage in April. Total pay, including bonuses, increased 6.5% year-on-year in the three months to April.
“In cash terms, basic pay is now rising at the fastest rate since the current record began, apart from the period when the figures were distorted by the pandemic. However, even then, wage growth continues to lag behind inflation,” said Darren Morgan, director of economic statistics at the ONS.
See: What are SPACs?
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