FTSE 100: High wage growth fuels further interest rate hike fears

LONDON’s FTSE 100 ended yesterday in the red, as record-breaking wage growth fuelled speculation of a 15th straight Bank of England rate hike.

The capital’s blue-chip index was down 1.63 per cent by close of play to 7,384.94, weighed down by Phoenix, down 3.56, alongside HSBC and Glencore.

Investment firm Legal and General also dragged down the index, closing down three per cent despite beating profit expectations.

AJ Bell analysts warned that while the firm “may be on track from its own perspective”, the material drop in assets under management had caused the disquiet.

Meanwhile the FTSE 250 index, which is more aligned with the UK domestic market, also nudged down half a per cent to close at 18,659.75.

London was weighed down by fresh figures released by the Office for National statistics yesterday, with higherthan-expected wage growth increasing expectations of further bank rates.

Inflation figures out today will also be closely watched by the market, with the rate expected to drop again.

Grocery price inflation data out yesterday recorded its second sharpest fall since 2008, down 2.2 percentage points to 12.7 per cent for the four weeks to 6 August.

“Alarm bells are ringing on UK inflation once more as the latest figures from the Office for National Statistics show record wage growth,” AJ Bell analyst Russ Mould said.

“This builds pressure on the Bank of England and has prompted an increase in sterling and gilt yields, as well as a big fall in UK stocks, as it suggests inflation is becoming increasingly entrenched in the economy.

Peel Hunt analysts have rated 888 Holdings a ‘buy’ after the gambling giant reduced its debt by £68m. It also hit £66m in cash synergies and is expecting the full £150m in 2024, a year ahead of schedule. “No noise from the nursery,” said analysts, “it is slightly disconcerting that 888 has managed an announcement without any shocks, but we will take it at face value and are reassured that leverage is descending from nosebleed territory”.

Rate Hikes On The Cards

Analysts at Peel Hunt have rated Just Group a ‘buy’ after it saw strong results in the first half of the year, with underlying profits rising 151 per cent to £173m. New business sales showed momentum and more than doubled to £1.9bn, six per cent ahead of estimates. “We remain positive,” said analysts, adding that they see longterm value in the company.