Signs of a further slowdown in the US jobs market convincing the Federal Reserve to slow its interest rate hike cycle will top investors’ wish list this week.
London’s FTSE 100 index notched a decent showing last week, climbing 1.37 per cent to close at 7,486.67 points, while the domestically-focused mid-cap FTSE 250 index rose by a similar amount to finish at 19,545.70 points.
New jobs figures from across the pond out on Friday are likely to show employers reining in hiring in response to rising interest rates and uncertainty over the future health of the US economy.
While the American economy is holding up better than the UK and eurozone, firms are being squeezed by the Fed raising borrowing costs 75 basis points in a row to tame surging prices.
Last month, job openings fell to 261,000, while a string of sackings by tech giants including Facebook owner Meta indicate the US labour market is beginning soften.
FTSE 100 finished last week higher
The Fed is worried strong demand for workers rubbing against weaker labor supply will push wages higher, embedding high inflation into the economy.
A reduction in job openings would embolden the Fed to ease off the rate hike accelerator.
But, there is “little sign of a wage price spiral despite still high levels of vacancies. If anything, we are now starting to see in the current earnings season reports that the big tech companies are letting people go in their thousands,” Michael Hewson, chief economist at CMC Markets UK, said.
On these shores, Bank of England data on credit card spending and mortgage approvals will be closely watched for clues on whether the UK economy is in a recession.
Most experts think house prices are on track to fall steeply over the next year in response to higher interest rates. Latest Bank data shows households are not turning to credit cards to maintain spending, likely over fears of being unable to repay debt if they are made unemployed during the economic slowdown.
On the corporate front, short haul airline and FTSE 250 listed easyJet posts half year results on Tuesday. Fintech Wise updates markets on the same day.