FTSE 100 close: Easing in wage growth gives London markets a lift
London’s FTSE indexes climbed into the green after new figures from the Office for National Statistics showed that pay growth was beginning to ease in a boost for the Bank of England.
The FTSE 100 closed 0.58 per cent higher at 7,675.21 while the midcap FTSE 250, which is more aligned with the health of the domestic economy, climbed 0.97 per cent to 17,689.46.
Figures out this morning showed the rate of pay rises slowed from record levels — although it remained at elevated levels. The data will reassure the Bank of England that its aggressive monetary tightening cycle is working, reducing the chances of another interest rate hike.
“Wages are retreating from giddy heights, but it’s a slow march down and the Bank of England will continue to keep a wary eye on progress,” Susannah Streeter, head of money and markets at Hargreaves Lansdown said.
“There will be more small sighs of relief that labour market pressures are easing, and the numbers will add to expectations that the Bank of England will continue to press pause on interest rate hikes,” she added.
On the FTSE 100 Rolls-Royce shares closed around 1.1 per cent after announcing a major round of job cuts.
The aerospace manufacturer said it estimated that 2,000 to 2,500 jobs would be axed from the company’s 42,000 strong workforce in an attempt to “create a more agile business.”
Having traded lower earlier in the day, the FTSE 100’s housebuilders staged a recovery. Barratt Developments closed 2.3 per cent higher while Taylor Wimpey ended 2.2 per cent higher.
This came after FTSE 250-listed Bellway recorded a poor set of results, but still managed to climb over four per cent.
Underlying profit before tax fell by 18.1 per cent to £532.6m it its preliminary results as the company continues to be impacted by tough mortgage rates which impact buyer demand.
Shares in St James’s Place fell around 0.5 per cent after it completed an “internal evaluation” of its fees.
The firm has come under pressure from the City watchdog, the Financial Conduct Authority, to fall in line with its stringent new consumer duty. St James’s Place confirmed it would push through an overhaul for the “vast majority of new investment bonds and pensions”.
Markets will be keeping a close eye on inflation data out tomorrow morning which will give a good indication of whether the Bank of England will have to hike interest rates again.