The FTSE 100 is expected to open around 33 points higher, virtually erasing all of yesterday’s losses.
- FTSE 100 up 64 points
- Survey shows sharp rise in salaries
- Ukraine-based Ferrexpo is a top mover
UK households’ financial confidence has fallen to a new low, according to a new survey by YouGov and Cebr.
Elsewhere, a day after Tesco hiked wages, rival J Sainsbury PLC (LSE:SBRY) has upped the ante to become one of the first major grocery groups to join the Real Living Wage.
The FTSE 100 supermarket chain said it will pay staff £11.05 an hour in London and £9.90 outside the capital.
The move follows Tesco increasing its hourly rate 5.8% to £10.10 yesterday.
Sainsbury’s had announced in January that it would increase base pay to £10.00 an hour for directly employed staff outside of London, but a group of institutional and private investors led by ShareAction had tabled a resolution for the upcoming AGM to mark the start demanding a living wage for all of its employees.
Sainsbury’s Chief Executive Simon Roberts said: “Our strategy is to invest in what matters most to both clients and colleagues. We know times are tough for everyone. That’s why we were one of the first in the industry to pay more than the Real Living Wage of £10 an hour and we’ve brought forward the announcement of our annual salary review to early January as we help colleagues plan and manage living expenses wanted in the coming year.”
Among retailers, John Lewis confirmed last month that it would pay a real living wage, joining Burberry and Ikea.
The FTSE 100 is up 64 points, or 0.85%, to 7,616, once again lagging European indices.
10:20 a.m .: Russia cuts interest rates
The Central Bank of Russia (CBR) cut its main interest rate to 17.00% today after embarking on a massive emergency rate hike to 20% in late February following the invasion of Ukraine.
The decision came as a surprise as no official meeting was scheduled until the end of April.
There is a “steady flow of funds into fixed deposits,” the CBR said, and recent economic data “points to a noticeable slowdown in current rates of price growth.”
The CBR seems confident that the most acute phase of the economic crisis is now over, said Liam Peach of Capital Economics.
“More rate cuts are likely later this year, but it’s likely a gradual process as the central bank tries to bring inflation back to target levels.”
As the press release hints at the inflow of funds to fixed-term deposits, it suggests the CBR has grown confident that its emergency rate hike in late February, along with capital controls and other measures, has averted a large and destabilizing bank run.
Commenting on the data pointing to a slowdown in price growth, he said: “Although later figures due later today are likely to show consumer prices rising by around 8%m/m in March, price growth (measured in m/w) has slowed. strongly towards the end of the month and inflation may have slowed to 2-3% m/m in April, at least in part due to the ruble’s appreciation in recent weeks.”
9:57 a.m.: Financial leader
Financial stocks lead the Footsie, buoyed by expectations of faster rate hikes.
“Investors continue to grapple with the challenges posed by rising interest rates and rising inflation, with the latest UK payroll data providing an indication of how entrenched inflationary pressures are,” said Russ Mold, Investment Director at AJ Bell.
While the rising wages in the REC and KPMG report could be cause for celebration for those receiving the record wage packages, “the risk is that even the most generous salaries will severely impact their spending power with the rapidly escalating cost of living,” says Schimmel.
As employers scramble to fill positions across the economy, Tesco yesterday followed rivals Sainsbury’s and Morrisons with plans to raise wages, although BP Group met an unimpressed reaction from its main union.
Looking at markets, Ukraine-based iron ore company Ferrexpo PLC (LSE:FXPO) was up 13%, which reported a 2% year-on-year production decline in the first quarter as its operations are located outside of major conflict zones.
“The situation in Ukraine remains complex,” the statement said, with the local government calling for economic activities to continue, but staff safety raising concerns and alternative export methods being explored as the main ship berth at Pivdennyi port is changing located in southwestern Ukraine which remains closed.
Amid plenty of headlines about travel woes this week, Jet2 PLC reported record bookings over the summer and saw its shares soar over 4%.
Elsewhere, shares of Polymetal International PLC (LSE:POLY) rose even as Deloitte resigned as auditor amid an extension of the deep freeze Russian companies were facing, which also resulted in the US blacklisting the world’s largest diamond prospector, Alrosa put.
The FTSE is up 1% to 7,626.77, while the FTSE 250 is up 0.4% to 21,121 despite gains from Ferrexpo.
9.03 a.m .: Salary increases steeper
According to a survey by the Recruitment and Employment Confederation (REC) and KPMG, starting salaries rose in March at the fastest pace since records began in the late 1990s.
The sharp rise in permanent wages came amid a persistent mismatch between labor supply and demand, with job vacancies growing for the fourteenth straight month in March and the fastest since September.
The survey pointed to a slower pace of hiring in March, with the permanent employment index slipping to its lowest level in a year, while the corresponding temporary employment index was at an 11-month low but still remained at historically high levels .
The report “makes for familiar reading as the persistent mismatch between labor supply and demand continues to add upward pressure on wages,” analysts at Daiwa Europe said.
The report “pointed to a shortage of suitable candidates, as pandemic and war-related uncertainty and fewer EU workers meant limited labor availability rather than lower demand”.
8.45 a.m.: A lively start
The FTSE 100 appears to be following the pace of the US, which rallied overnight.
The big news this morning is that UK starting wages rose at a record pace in March even as recruitment figures slowed, according to the latest KPMG/REC jobs report. This is due to increased demand for labor and higher wages being paid to mitigate rising inflation.
Elsewhere, Rishi Sunak claims he was the victim of a “smut” campaign after Labor criticized his wife’s tax status. The Chancellor’s wife has been criticized for claiming non-domicile status, thereby avoiding UK tax on income from foreign investments.
Spread better CMC Markets PLC (LSE:CMCX) shares are up 8% after announcing that operating profit for the just ended fiscal year should come in at the high end of the company’s guidance range, in a record achievement.
Etherity Networks PLC expects significant revenue growth from existing and potential contracts this year. The telecom hardware business reported an increase in revenue in its 2021 results, with revenue rising to $2.6 million.
Oncimmune Holdings PLC (AIM:ONC) has received two new contracts for its ImmunoINSIGHTS services. Both deals are with U.S. biopharmaceutical companies and contribute to a series of similar contract wins for the company.
8:47 a.m.: Oil and banks on top
The FTSE 100 surged higher in early trade, recouping losses earlier in the week and hitting its highest level in almost two months.
London’s scale for blue chip stocks rose 81 points, or 1.1%, to 7,632.9.
Oil giants BP PLC (LSE:BP.) and Shell PLC (LSE:SHEL, NYSE:SHEL) led the day despite crude prices falling overnight.
Banks also feature prominently in the rankings, led by Barclays PLC and Standard Chartered PLC.
6:25 a.m.: Setback
The FTSE 100 will erase most of yesterday’s losses on Friday morning after US indices rallied late yesterday.
Spread betting quotes suggest the index will open 33 points higher at 7,585.
US indices ended the day on credit, although the US Federal Reserve’s comments on interest rates became more hawkish.
“St. Louis Federal Reserve President Bullard was the latest Fed spokesman to release a series of hawkish statements about future monetary policy. The fact that stocks rebounded from intraday losses suggests 225 basis points [2.25 percentage points] of Fed fund hikes that futures markets have now priced in might be enough for now. It’s the Fed’s fight to lose, not win,” said OANDA’s Jeffrey Halley.
Berenberg took the hint and made his call for a Fed policy rate “to reflect upside inflation risks and the growing consensus in the FOMC [Fed policy-making committee] Members that aggressive interest rate moves are warranted to curb inflation.”
It now expects rate hikes of half a point each in May and June, followed by hikes of a quarter point in the remaining four meetings of the year.
The Dow Jones rose 87 points (0.3%) to 34,584, while the broader S&P 500 climbed 19 points to 4,500.
In Asia, markets are in retreat this morning.
Tokyo’s Nikkei 225 is down 6 points to 26,883 and Hong Kong’s Hang Seng is down 125 points to 21,684.
Today in London we have a trading update scheduled from CMC Markets PLC (LSE:CMCX), the trading platform operator.
The company said in late January that both its leveraged and unleveraged platforms will continue to perform well in 2022.
Both platforms were running “almost at record levels,” according to CFO Euan Marshall.
CMC said it was still confident of posting net operating profit within its guidance range of £250m to £280m for the year 31 March.
Iron ore pellet maker Ferrexpo PLC (LSE:FXPO) is expected to provide a first quarter production update, in which investors will be interested to know how much production at its operations in central Ukraine has been affected by the war in the country.
Around the markets
- Sterling: $1.3060, down 0.14 cents
- Gilt: 1.731%, up 2.08 basis points
- Gold: $1,931.90 an ounce, down $6.90
- Oil: $100.11 a barrel, down 47 cents
- Bitcoin: $43,512, down $61
- Ethereum: $3,252, up $13
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