Pound climbs on hopes of real wage growth as FTSE falls
Data released on Tuesday could show wage growth is outstripping inflation.
London’s blue chip index was under pressure on Monday as sterling climbed on hopes of positive data on UK employment.
The FTSE 100 ended the day 66.36 points lower, closing down 0.91% at 7,198.2.
The pound was up 0.61% against the dollar at 1.432. Against the euro, the pound was up 0.44% to 1.157.
UK unemployment is expected to remain constant at 4.3% in data published on Tuesday, but average earnings are forecast to rise to 3% in the three months to February, meaning wage growth could overtake inflation for the first time in over a year.
This could also encourage a “more hawkish” tone at the Bank of England’s next meeting in May, according to Fiona Cincotta, senior market analyst at City Index.
She added: “The index was weighed down by a combination of a weaker oil price, a stronger pound and a large sell-off in WPP and Evraz, although a rally in the US helped lift the FTSE into the close.
“Investors concentrated on putting the US-led military bombings against Assad’s regime behind them and fortunately there is plenty for them to focus on.”
In oil markets, Brent crude prices were down 1.3% at 71.64 dollars a barrel, as fears cooled about tensions in the Middle East.
In UK stocks, traders sold off WPP’s stock in the wake of the resignation of long-standing chief executive Sir Martin Sorrell.
Sir Martin, who was the boss of the advertising giant for more than 30 years, stepped down over the weekend following allegations of misconduct. WPP’s shares closed the day down 6.48% or 77p at 1,111p.
Shares in Costa owner Whitbread rocketed after activist investor Elliott said it had become the business’s largest shareholder.
Elliott now owns over 6% of Whitbread, the firm said on Saturday, and it is understood that it will now push for Costa and Premier Inn to become two separate listed entities.
Whitbread’s shares closed up 7.19% or 283p at 4,218p.
Shire’s shares fell 47.5p to 3,559p after the pharmaceutical giant sold its oncology business to Servier for 2.4 billion US dollars (£1.68 billion).
The sale comes after Japan’s Takeda said it was considering a takeover of Shire, which is valued at £32.8 billion. Takeda has until April 25 to make a formal offer for Shire, although experts have questioned how the deal would be funded.
The biggest risers on the FTSE 100 were Whitbread up 283p to 4,218p, Smurfit Kappa Group, up 90p to 3,072p, Marks and Spencer up 4.6p to 276.3p and Rolls Royce, up 11p to 877.8p.
The biggest fallers on the FTSE 100 were Evraz down 27.4p to 365.2p, WPP down 77p to 1,111p, Microfocus International down 47p to 1,252p and Sage Group down 18.6p to 598.4p.