FTSE fell after Donald Trump won the Iowa caucuses. (Related news)
FTSE, European and U.S. stocks fell on Tuesday after former President Donald Trump won a landslide victory in the Iowa caucuses.
When US markets opened, the FTSE 100 (^FTSE) fell 0.4%. Meanwhile, Germany’s DAX (^GDAXI) and Paris’ CAC (^FCHI) fell by 0.6% and 0.4%, respectively. The pan-European Stoxx 600 (^STOXX) also fell by 0.4%.
After a dramatic night, Ron DeSantis came in a distant second place over former United Nations Ambassador Nikki Haley, cementing Trump as the front-runner for the 2024 Republican presidential nomination.
In his victory speech, the former president said, “I want to solve the world’s problems.”
Since the start of U.S. trading, the S&P 500 (^GSPC) is down 0.3%, the Dow (^DJI) is down 0.3%, and the Nasdaq (^IXIC) is down 0.4%.
Meanwhile, UK labor market data showed that wage growth is slowing. Although the number of job postings decreased by 49,000 from the same quarter, the unemployment rate remained almost unchanged at 4.2%.
PwC UK economist Jake Finney said: “Inflation is now on track to reach the 2% target as early as April, and there is a good chance we will see strong real wage growth throughout this year.” ” he said.
read more: Trend Ticker: Latest Investor Updates on Apple, Tesla, AstraZeneca, Hugo Boss
Financial markets currently expect the Bank of England’s benchmark interest rate to be cut by more than 100 basis points during 2024. Finney added that signs that the labor market is gradually normalizing strengthen the view that a rate cut could come as early as May.
Prime Minister Jeremy Hunt said: “These days have been tough for many families, but with inflation now falling and the economy gradually returning to growth, today’s continued rise in real wages should provide further relief.” Ta. “On top of this, the reduction in National Insurance contributions will put more people back into the job market, supporting economic growth, as well as saving the typical dual-earner household around £1,000 this year.”
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FTSE 100 hits one-month low
Here’s what Russ Mold and AJ Bell had to say:
The FTSE 100 index fell to a one-month low, dragged down by healthcare and financial stocks. Part of the problem is that central banks are constantly teasing the possibility of rate cuts but refusing to actually do so, which is causing anxiety among investors. Despite numerous signs that inflation is falling, which has raised market expectations for rate cuts, central banks have been surprisingly stubborn.
Rightmove was the biggest decliner in the FTSE 100 index following the JPMorgan downgrade, falling 4%. US group CoStar recently acquired property portal OnTheMarket to enter the UK market, raising concerns among investors and analysts that Rightmove’s dominance could finally be challenged. ing. CoStar is a large US company with the power to disrupt Rightmove’s long-standing market position.
German ZEW data shows great promise
Germany’s business confidence index came in better than expected.
German ZEW survey forecast January: 15.2 (estimated 11.7, previously 12.8) – Current status of ZEW survey January: -77.3 (estimated -77.0, previous -77.1)
Hugo Boss shares plunged more than 10% on Tuesday, leading losses in the Stoxx 600 index after the company missed its profit target for the year.
Full-year sales rose 15% to a record 4.2 billion euros (approximately 360 billion yen). However, this did not turn out to be favorable conditions for investors, as preliminary pre-tax profit of 121 million euros was lower than the consensus estimate of 129 million euros.
The brand is one of many luxury retailers that have had to face tough market conditions. Shares in UK-listed Burberry fell on Monday after disappointing Christmas sales results.
The full picture of the UK wage growth rate
Yahoo Finance UK reporter Pedro Goncalves has this to say about today’s pay data:
Wage growth in the UK slowed in the three months to November, supporting claims by the Bank of England (BOE) that it will start cutting interest rates in the coming months.
Figures from the Office for National Statistics (ONS) show that the rate of pay growth, excluding bonuses, fell sharply from 7.3% to 6.6% in the three months to November. Salary increased by 6.5% after taking bonuses into account.
Paypacket continues to grow faster than inflation, which was at a two-year low of 3.9%.
BoE interest rate setters will be watching the new data closely over concerns that wages are rising too quickly to bring inflation down to the 2% target.
Ben Broadbent, deputy governor of the BoE, said last month that wage growth would “probably need to decline more clearly, for a longer period of time, before the Monetary Policy Committee can safely conclude that conditions are firmly on the decline”. There will be,” he said.
Threadneedle Street has raised interest rates to combat inflation, keeping them at 5.25% in recent months, a 15-year high.
read more: Slower UK wage growth suggests possibility of central bank interest rate cuts
FTSE rise and fall
Here are the stocks that dragged down the FTSE 100 this morning.
Right move, down 4.6%
AstraZeneca falls 2.4%
Rolls-Royce, down 1.9%
Upwards:
Ocado up 5.4%
Experian up 2.4%
Burberry rises 1.7%
Interest rate cut? Don’t jump the gun…
Despite the fact that markets are clearly pricing in rate cuts next year, at least in Europe, Finalt’s Neil Wilson notes that policymakers are pushing for rate cuts. he says:
Several monetary policy hawks from the European Central Bank surrounded themselves and sent a clear message all at once. This is no coincidence, and the market is taking it seriously. “It’s too early to talk about rate cuts, inflation is too high,” Nagel said, while Holzman told CNBC, “I can’t think of talking about rate cuts yet, because we shouldn’t be talking about rate cuts. “That’s all we’ve seen in the last few weeks.” Because it’s facing the opposite direction, It is even expected that there will be no production cuts at all this year.” [emphasis my own].
I think this is exactly in line with the point I’ve been making for some time now. The market has priced in too many cuts. Central banks are focused on lumpy, non-linear disinflation and will not be completely confident that they are in a position to cut rates. Tight labor markets provide cover that remains high for an extended period of time.
One night in the US and Asia
Asian stock markets were mostly weak on Tuesday, with selling in Japan’s Nikkei Stock Average (^N225) and Hong Kong’s Hang Seng Index (^HSI). They lost 0.8% and 1.9% respectively during the session.
Hang Seng was dragged down by asset gauges hitting record lows. At the close, the index hit a 14-month low, marking its biggest decline in seven weeks.
Investors also became cautious ahead of China’s key GDP figures to be released on Tuesday. Concerns that one of the world’s major growth engines had stopped growing continued until the end of 2023.
US markets were closed on Monday for MLK Junior Day.
good morning!
Good morning from London! Labor market figures released this morning show that the arctic winds that blew through Britain on Tuesday aren’t the only thing cooling down. Let’s get straight to the point.
Video: Economic growth was 0.3% in November, but threat of recession remains
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