UK stocks up on slowdown in wage growth, all eyes on US inflation data and Hasbro suffers pre-Christmas blues

 “It’s a big day for clues as to how central banks might act at their next interest rate decision,” says Danni Hewson, head of financial analysis at AJ Bell.

“An easing in wage growth and a decline in job vacancies in the UK is something that will be closely watched by the Bank of England, particularly as the 7.2% growth in average earnings in the three months to October was considerably lower than the 7.7% consensus forecast.

“Prior to this announcement, the Bank of England had been expected to hold rates at 5.25% when it next reports this Thursday. If we see a continuation of the wage growth trend then investors are likely to become more confident that the Bank of England will start to cut rates sooner rather than later in 2024.

“Markets certainly responded positively to today’s jobs data as the more domestically focused FTSE 250 index jumped 0.2% to 18,795, while a 0.5% rise in the more international-focused FTSE 100 to 7,579 was driven in part by names that would benefit from a lower UK interest rate. Think housebuilders, retailers and property groups.

“US data later today will be watched closely by investors with expectations for the annual pace of inflation to slow from 3.2% to 3.1%. Core inflation is expected to remain steady at 4%, twice the level desired by the Federal Reserve over the long term. Core inflation excludes energy and food costs and is expected to show a small increase from 0.2% in October to 0.3% in November, somewhat muddying the water for a narrative desired by investors that shows inflation gradually easing.

“Tomorrow’s US rate decision currently has the Fed forecast to keep rates unchanged at 5.5%. While consumers and businesses will welcome no further hikes, the Fed sitting on its hands is not what investors want. They want cuts as we’re in a market where bad news on the economic front is treated as good news by investors.”

Hasbro

“Elsewhere, shares in Hasbro fell 5.5% in after-hours trading after the toy group said it would cut jobs amid weaker sales in the run-up to Christmas.

“Job cuts would normally be welcomed by the market as it implies costs are being taken out of the business, yet the reason behind the cuts is worrying for the retail sector as it implies strong consumer spending earlier this year is running out of steam.”

These articles are for information purposes only and are not a personal recommendation or advice.