Jobs report for August expected to show rise in wages
U.K. stocks dropped broadly Wednesday, under pressure as the pound traded at its highest in a year against the U.S. dollar before the release of labor-market figures.
The FTSE 100 index fell 0.8% to 7,343.14, with roughly 10 components moving higher. On Tuesday, the benchmark shed 0.2% (http://www.marketwatch.com/story/uk-stocks-edge-higher-but-strong-pound-keeps-a-cap-on-gains-2017-09-12), after data showed inflation rising to 2.9% (http://www.marketwatch.com/story/uk-inflation-picks-up-pace-testing-boe-patience-2017-09-12).
“The U.K. FTSE remains hindered by sterling strength … in the wake of strong U.K. inflation figures, as well as a U.S. Dollar Index retreat to yesterday’s lows,” said analysts at Accendo Markets in a note.
Stronger sterling can hurt revenue and earnings prospects for U.K.-listed multinational companies and, in turn, weigh on their shares. The pound built on gains Wednesday, trading at levels last seen in September 2016. It was buying $1.3309, compared with $1.3284 late Tuesday in New York.
Among the multinationals under pressure, shares in Johnnie Walker whisky maker Diageo PLC (DEO) lost 1.5%. InterContinental Hotels Group PLC (IHG) and drug maker GlaxoSmithKline PLC (GSK.LN) each declined 1%.
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Stock movers: Shares of EasyJet PLC (EZJ.LN) were among the FTSE 100’s few advancers, adding 1.3%. The airline will start offering connecting services to long-haul carriers (http://www.marketwatch.com/story/easyjet-to-sell-seats-on-partner-long-haul-flights-2017-09-13) flying to the U.S. and other destinations, expanding the network of cities international passengers can reach on a single ticket.
Other gainers were retailers Next PLC (NXT.LN) and Marks & Spencer Group PLC (MKS.LN) , each up 0.7%.
Economic data: The Office for National Statistics is scheduled to release August jobs figures at 9:30 a.m. local time, or 4:30 a.m. Eastern Time.
The U.K. unemployment rate is seen as remaining at 4.4%, according to a poll of analysts by FactSet. Wages excluding bonuses are expected to have risen 2.2% in the three months to August. Pay including bonuses is projected to have increased 2.3%.
“It’ll be interesting to see how sterling reacts to the wage growth data. While any improvements will help mitigate fears about the sharp fall in real wages, a weak reading would put more pressure on the Bank of England to try and curb inflation with a rate hike,” said Connor Campbell, financial analyst at Spreadex, in a note.
The Bank of England, led by Governor Mark Carney, is slated to release an update on monetary policy Thursday. The central bank is expected leave the key interest rate at 0.5%.
(END) Dow Jones Newswires
September 13, 2017 04:15 ET (08:15 GMT)