Tuesday was a mixed day for the FTSE 100, the barometer of the biggest companies on the London Stock Exchange, as wages in the UK grew at their slowest pace in two years. Here is what is happening in the world of money right now.
UK Wages Are Slowing Down
The Office for National Statistics announced that the wage growth in the UK weakened. During the three months to July, regular wages increased by 5.1% compared with the previous year, which was the weakest growth since July 2022. In other words, people’s paychecks are not growing as large as quickly as they used to be.
First, the good news: fewer people are out of work. The UK’s jobless rate fell to 4.1% from 4.2% in the three months to July. But there is a worrying trend for young people. The unemployment rate for 18- to 24-year-olds increased to 13.3%, the highest in more than three years. More young people are finding it tough to get jobs.
How Are the Markets Responding?
London’s benchmark stock market index, the FTSE 100, was in the red 0.6% during afternoon trading, underperforming compared to its European counterparts. The DAX index in Germany was 0.5% lower, but the CAC in Paris gained 0.1%. The broader European index, STOXX 600, was down by 0.2%.
In the United States, meanwhile, Wall Street appeared to be off to a quiet start as the futures for the S&P 500 Dow and Nasdaq barely moved. This means that traders are not expecting big changes when the markets open in the U.S.
The Pound and Possible Interest Rate Cuts
The British pound was up a smidgen against the U.S. dollar, 0.1% higher at 1.3090. It is small, one might argue insignificant; however, such movement does say much about the people who still care in the currency markets.
There’s speculation that the Bank of England may cut interest rates again. Why’s that? Well, when wages are not growing that much, people have less money to spend. Cutting interest rates can make it cheaper for people to borrow money, thus perhaps prompting people to spend more in the hope of boosting the economy.
Oil Demand Drops
In a separate development, OPEC has trimmed its forecast of world oil demand this year and in 2025. The Organization of the Petroleum Exporting Countries said in its monthly report that it sees the world needing 80,000 fewer barrels of oil per day in 2024 than previously believed, reducing the total expected growth in demand to about two million barrels per day. For 2025, OPEC also cut its forecast of demand by 40,000 barrels to 1.7 million barrels per day.
What that means is people and companies might use less oil than initially thought, which could have huge implications for prices and take a ripple across the entire energy market.
US Politics: Harris vs. Trump and What It Means for Investors
The whole of America are on the forthcoming debate between Kamala Harris and Donald Trump that is anticipated to raise stiff competition for the presidency. This is their first big debate, and it is scheduled on November 5th. Investors pay close attention because whoever wins might cause a change in economic activities.
According to Nigel Green from Devere’s, in the event of a win by Kamala Harris, the focus may be on renewable energy, housing support, and even cannabis stocks. On the other side, if Donald Trump emerges as the winner, oil, defense, and cryptocurrency stocks are likely to emerge stronger.
There’s also, of course, the U.S.-China relationship, which has been pretty tense for the last couple of years. A Harris administration might be more chill with China, eschewing some of the more bombastic language heard under Trump. That could be a plus for companies with huge China exposure, like Tesla and Apple, and also chipmakers such as Nvidia and Qualcomm.
Harris also focuses on housing. She plans to offer first-time homebuyers assistance with down payment and tax credits to developers building more affordable housing. Should she create policies, businesses and investors may see more opportunities in the line of housing.
Closing Remarks
Global markets are trending in a variety of directions: UK wage growth cools off, young people struggle to find jobs, and European stocks still seem mixed. Meanwhile, the Harris versus Trump debate could be one of those disruptions in investor complacency. Keep an eye out for these and more that might have a significant impact on your wallet and the overall economy.
Remember, finance is like a see-saw-up one minute, down the next. It’s always good to know what’s going on and to think ahead!
