FTSE 100 falls again as wage growth ‘throws cold water’ on rate cut hopes
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The FTSE 100 suffered its second consecutive day in the red on Tuesday as hopes faded of fast interest rate cuts in the UK and US in the coming months. London’s blue-chip index fell 66.85 points, or 0.81%, to end the day at 8,195.2. Economic data in the UK made for grim reading for people hoping for a succession of quick rate cuts from the Bank of England.
Wage growth has jumped higher for the first time in more than a year, reinforcing expectations that the Bank will hold interest rates later this week. And an expected rise in inflation for November, to be released on Wednesday, could further dissuade policymakers from cuts next year.
Dan Coatsworth, investment analyst at AJ Bell, said the data “throws cold water” over hopes of a cut at the Bank’s meeting on Thursday. He said: “It’s not the news that consumers and businesses buckling under financial pressures want to hear.”.
Meanwhile, the US Federal Reserve will also announce whether to cut or hold at a meeting this week. Mr Coatsworth added: “Any sense that rate cuts might become more pedestrian in the new year could cause a wobble on markets and some investors could be reducing their exposure until conditions move more in their favour.”.
At the end of the day in Europe Frankfurt’s Dax index fell 0.30%, while the Cac 40 in Paris rose 0.12%. In New York a little while after markets had closed in Europe the S&P 500 had fallen 0.36%, while the Dow Jones was 0.52% lower. On currency markets the pound was trading 0.27% up against the dollar at 1.273 and was 0.31% up against the euro at 1.21.
