FTSE 100: Stocks fly to 3-month high as jobs data

Proactive Investors -

• FTSE 100 adds 80 points
• UK wage growth easing raises BoE cut hopes
• Persimmon (LON:PSN) profits more than halved

The FTSE is continuing to charge higher, though the assistance from the pound is fading away, with the index up above 7750 for the first time since the 2nd of January.

Financials are prominent in the top risers, with banks Barclays (LON:BARC), Lloyds (LON:LLOY) and NatWest (LON:NWG) in among them, the Prudential (LON:PRU) is top of the list, up 4%.

“Interestingly, nearly all sectors were in positive territory, implying that investors were feeling upbeat across the board which is a healthy situation to have in markets," says Russ Mould, investment director at AJ Bell.

He adds that investor sentiment is being boosted by the UK wage data, "which raises the chances of the Bank of England cutting interest rates sooner rather than later".

"However, imminent US inflation data could easily turn markets on their head if it looks like the cost-of-living pressures are here to stay for a while longer, and that the Fed won’t be cutting rates in the near term."

Casting a glance at bitcoin, the rally seems to have lost steam, pulling back to $71,700 this morning, but we will see what happens when America wakes up.

Mouls says "perhaps indicating that some investors are banking profits while the going is good".

h2 FTSE leads European charge as pound slips/h2

The FTSE 100's 68-point rise to 7737 so far this morning means it is leading the European charge.

London's index is up 0.89%, while Germany's DAX has risen 0.33%, France's CAC 0.14% and Spain's IBEX 0.53%

China-sensitive stocks like Prudential, Standard Chartered (LON:STAN) and HSBC (LON:HSBA) are leading the FTSE amid reports that Beijing is under pressure to provide some extra economic stimulus.

Market analyst Victoria Scholar at Interactive Investor says the big focus for markets today is the US CPI inflation reading later, which is expected to remain at 3.1% for February, while the monthly figure is seen ticking up to 0.4% versus 0.3% in January.

Francesco Pesole at ING said: "The dollar has found a bit of support into today’s US CPI data, which we expect to show a still too-hot 0.3% MoM core rate for February.

"If we are right with our 0.3% call, we may not see a big market impact already today, but it could definitely set the tone for a more defensive stance on FX – i.e., a gradual rotation back to the dollar – ahead of next week’s FOMC meeting."

h2 Pet medicines probe hits vet group/h2

Vet group CVS Group (AIM:CVSG) and pet store chain Pets at Home Group PLC (LON:PETSP) (LSE:PETS) are both down, 17.5% and 2.5% respective, after the Competition and Markets Authority warned that pet owners may be paying too much for their animals' drugs.

The CMA said it is launching a formal market investigation as pet owners are not being given enough information on pricing for both medicines and treatment, meaning they are often left overpaying for medicines.

“We have heard concerns from those working in the sector about the pressures they face, including acute staff shortages, and the impact this has on individuals,” CMA boss Sarah Cardell said. “But, our review has identified multiple concerns with the market that we think should be investigated further.”

Domino's Pizza Group (LON:DOM) PLC is another faller, down 8.5% after reporting that first-quarter sales would likely be lower than a year ago.

The update came alongside full-year numbers for last year that were largely in line with expectations, as well as news of a £62 million acquisition in Ireland.

Top of the FTSE 250 leaderboard is TP ICAP (LON:NXGN) PLC (LSE:TCAP), up 10.7% after it announced its highest-ever profits and launched a new share buyback programme, starting today, of £30 million.

It also said it is mulling a separate listing for its data arm, Parameta Solutions.

h2 Earlier rate cut being priced in/h2

Financial markets are now repricing expectations of when the Bank of England will make its first rate cut, after the ONS labour market report earlier showed softening in several areas, including weaker wage growth.

"This has caused traders to reassess their bet that the Bank of England will delay cutting rates until August, and there are growing expectations that the first BOE rate cut will come in June, and that there will be three cuts from the Bank this year," says market analyst Kathleen Brooks at XTB.

"As the market recalibrates its expectation for the first BOE rate cut from August to June, sterling is coming under downward pressure," she added.

The pound, which has been the best performing currency in the G10 so far in 2024, has slipped from $1.282 before the ONS report down to $1.278 on the back of the data.

"The dollar is staging a comeback this week, which is also weighing on the pound. Gilt yields are also lower, which may add pressure on sterling in the short to medium term," Brooks added.

ONS director of economic statistics Liz McKeown said: “Recent trends in the jobs market are continuing with earnings, in cash terms, growing more slowly than recently but, thanks to lower inflation, real terms pay continues to increase."

She noted that the number of job vacancies has also been falling for coming up to two years, though the total remains more than 100,000 above its pre-pandemic level.

“Over the last year, there was little change in the proportions of people who are employed, unemployed or neither working nor looking for work, though the overall number of people in work is still rising.”

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