LONDON MARKETS: U.K. Stocks Inch Higher After Mixed Jobs Report
15 Maggio 2018 - 12:44PM
Dow Jones News
By Sara Sjolin, MarketWatch
Vodafone slumps after news of CEO's planned departure
U.K. stocks inched higher on Tuesday after a mixed jobs report
that was seen as easing pressure on the Bank of England to raise
interest rates.
What are markets doing?
The FTSE 100 index was up 0.2% at 7,727.95, on track for its
highest close since late January, according to FactSet data.
The pound traded at $1.3546, compared with $1.3556 late Monday
in New York. Sterling has lost almost 5% against the dollar over
the past month as expectations of an imminent rate hike dwindled
following dovish comments from BOE Gov. Mark Carney and a string of
disappointing data. A weaker pound tends to boost the FTSE 100 as
index's components make the bulk of their earnings overseas, with a
softening sterling making those goods and services relatively more
attractive.
What is driving the market?
All eyes were on the U.K. jobs data. The unemployment rate
remained at a 42-year low of 4.2% in March, while wages without
bonuses advanced 2.9%, up from 2.8% in February. However, earnings
including bonuses slipped to 2.6% from 2.8%.
Carney said last week at the central bank's quarterly inflation
report news conference that interest rates will rise over the next
three years, if the economy evolves as the bank forecasts. The
comments were seen as adding extra weight to the macroeconomic data
coming out of the U.K.
What are strategists saying?
-- "Today's labor market report illustrates the conundrum faced
by the Bank of England. A strong labor market should push wage
pressures higher in the months ahead, requiring the Bank to hike
rates in order to ward off future inflation pressures," said Dean
Turner, economist at UBS Wealth Management, in a note.
"But, all the while that the data shows a struggling consumer,
it is difficult to have confidence that the time for tighter
monetary policy is now. In our view, this points to the bank
keeping rates on hold for a little while longer," he added.
-- "Today's data adds further weight to our view that pay growth
is moderating, not firming. Since the [BOE] has tended to attach
more weight to wage growth than the unemployment rate as a signal
of slack in the labor market, it is consistent with our view that
the [BOE] will not hike this year," said Daniel Vernazza, chief
U.K. economist at UniCredit, in a note.
Stock movers
Shares of Vodafone Group PLC (VOD.LN) (VOD.LN) dropped 2.7%
after the telecom giant said its chief executive Vittorio Colao
will step down
(http://www.marketwatch.com/story/vodafone-cfo-to-succeed-ceo-colao-in-october-2018-05-15)
and be succeeded by Chief Financial Officer Nick Read, effective
Oct. 1.
EasyJet PLC (EZJ.LN) rose 1.9% after the budget airline said its
pretax loss for the first half of fiscal 2018 narrowed
(http://www.marketwatch.com/story/easyjet-first-half-loss-narrows-on-higher-revenue-2018-05-15),
driven by record revenue a reduction in capacity by other
airlines.
Outside the FTSE 100, shares of CYBG PLC (CYBG.LN) slid 5.4%
after the bank reported disappointing earnings and said the U.K.
environment remains challenging.
(END) Dow Jones Newswires
May 15, 2018 06:29 ET (10:29 GMT)
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