London’s FTSE 100 opened the week in sluggish fashion as investors take in fears across the pond that the Fed could hike rates again.
The capital’s premier blue chip index closed on 7,556.41 points, 0.11 per cent down, while the FTSE 250, which is more aligned with the domestic market, was also broadly flat on 0.25 per cent.
The biggest risers were Melrose and Rolls-Royce, up 2.27 and 1.7 per cent respectively. Meanwhile, Scottish Mortgage Investment Trust, down more than two per cent, Anglo American PLC (1.87 per cent) and Unite Group, 1.6 per cent, led London FTSE’s losses. Earlier in the day, Entain, the gambling giant had been down 1.85 per cent.
Earlier in the day, FTSE opened relatively subdued after US markets closed in negative fashion last Friday, after a further dip in unemployment, leading to concerns about another Federal Reserve rate hike.
“In essence there was something for everyone in Friday’s jobs report, weaker jobs growth, the unemployment rate inching lower, and robust wage growth,” said Michael Hewson, chief market analyst at CMC Markets UK.
“Ultimately it spoke to a resilient US economy, as well as a possible Fed pause in September, ahead of this week’s CPI report, although there are some on the FOMC who are still on the ‘more rate hikes to come’ line.”
This morning in the UK, the Recruitment and Employment Confederation said its placements index had fallen by four points, from June 46.4 to 42.4, which was well down on 55.3 this time last year.
Recruitment group Page announced a special payout for shareholders, but “lower levels of confidence” proved hard to overcome, as the group’s profits plummeted by 45 per cent.
The group’s shares were down 0.66 per cent.
This comes after the Bank of England’s 14th straight interest rate hike last week, as Andrew Bailey and his team continues its bid to tame out-of-control inflation.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “The Report on Jobs survey should leave the MPC (the bank of England’s Monterey Policy Committee) feeling more confident that it already has put enough pressure on businesses’ finances and on underlying consumer demand to slow the jobs market and cool wage growth.”
The Bank came in for criticism earlier in the year after its chief, Andrew Bailey, said Brits should stop asking for pay-rises as they were a central factor in price rises.
“The FTSE 100 started on the back foot after mixed trading in Asia as investors react to the potential for further rate hikes in the US,” AJ Bell’s investment director Russ Mould said.
He added: “Officials at the Federal Reserve are suggesting they are not yet done in their battle with rising prices. Having been slow to respond to what they believed was transient inflation in 2021, it seems central banks like the Fed are in no mood to be complacent.
“US jobs data which showed earnings rising faster than expectations on Friday will only strengthen this resolve.
“The Fed are in no mood to be complacent.”
“With mortgages becoming less affordable it is proving increasingly difficult for people to get a leg up on the property ladder or even join the ladder in the first place”, Mould said.