Wall Street opened higher on Tuesday as traders anticipate key US inflation data out this week, while the FTSE 100 reversed earlier gains as the latest UK wage growth figures delivered a blow to the Bank of England’s (BoE) bid to bring down inflation.
The Dow Jones (^DJI) rose 0.43% to 34,089.23 points, the S&P 500 (^GSPC) gained 0.31% to 4,409.53 points, while the tech-heavy NASDAQ (^IXIC) climbed 0.28% to 13,723.38.
Meanwhile, the FTSE 100 (^FTSE) was down 0.18% at 7,260.56 points. The CAC 40 (^FCHI) in Paris rose 0.88% to 7,206.72 points, while in Germany, the DAX (^GDAXI) climbed 0.36% to 15,729.29 points.
It comes after the Office for National Statistics (ONS) said average weekly earnings, excluding bonuses, hit an annual rate of 7.3% during the three months to May — the highest level on record and higher than analysts had expected.
Investors will also be anticipating second-quarter (Q2) earnings reports this week from JPMorgan (JPM), Wells Fargo (WFC), Citigroup (C) and BlackRock (BLK)
In Asia, markets staged a recovery overnight as China’s factory-gate prices in June experienced the most significant decrease in seven-and-a-half years, while consumer inflation reached its lowest point since 2021.
Tokyo’s Nikkei 225 (^N225) closed up 0.04% to 32,203.57 points, while the Hang Seng (^HSI) in Hong Kong gained 1.18% to 18,698.19. In mainland China, the Shanghai Composite (000001.SS) also rose, by 0.48% to 3,219.28 points.
In currencies, UK wage growth data sent the pound up to its strongest position against the US dollar since April 2022, as investors doubled down on bets in favour of higher Bank of England interest rates.
The pound to dollar exchange rate (GBPUSD=X) rose 0.28% to 1.28, meaning £1 will get you $1.28. Meanwhile the pound to euro exchange rate (GBPEUR=X) went up 0.10% to 1.16.
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Matthew Ryan, head of market strategy at global financial services firm Ebury, said: “Financial markets are now pricing in a peak in UK rates of around 6.35% in the first quarter of 2024, which would surely make the BoE the most hawkish major central bank in the world between now and then.
“We think that markets are slightly ahead of themselves, although we do expect another 50 basis point hike from the MPC in August, with a real risk that the base rate tops out above 6%.”
Meanwhile, oil prices extended gains on Tuesday as OPEC+ output cuts offset demand concerns among investors.
US crude oil, or West Texas Intermediate (CL=F), gained 0.47% to trade at $73.33 a barrel, while Brent crude (BZ=F) rose 0.36% to $77.97 a barrel.
Watch: Jeremy Hunt prioritises tackling inflation over tax cuts amid pressure from Tory MPs
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