By Siddarth S and Khushi Singh
(Reuters) -Britain’s FTSE 100 hit a one-month low on Tuesday, dented by a stronger pound following data that showed basic wages grew at a record pace, spurring concerns about persistent inflationary pressures.
The exporter-heavy FTSE 100 index declined 1.6%, with shares of dollar earners such as drugmaker AstraZeneca and mining major Glencore tumbling as sterling rose 0.4%. [GBP/]
Basic earnings in Britain hit a new record growth rate, data showed, adding to worries for the Bank of England (BoE) about long-term inflation pressures even after 14 back-to-back increases in interest rates.
“The job market is gradually softening which raises questions about how long the economy can actually sustain this wage growth. But in the short term, the BOE will have to remain hawkish,” said Steve Sosnick, chief strategist at Interactive Brokers.
The BoE will get one more labour report before its Monetary Policy Committee meets in September. Traders have baked in a nearly 88% chance the central bank will hike interest rates by 25 basis points in September.
The domestic-oriented FTSE mid-cap index fell 0.5%, touching near one-month lows.
However, losses in the index were limited by a 8.3% jump in Marks & Spencer after the retailer raised its profit outlook, adding to evidence that its latest turnaround strategy is delivering.
The retail sub-index rose 1.4%.
Industrial metal miners fell 2.4% to their lowest since August 2022, as prices of base metals fell, hurt by a worsening demand outlook from top consumer China. [MET/L]
Legal & General fell 3% as the insurer and asset manager recorded a 10% drop in assets under management in the year to end June.
(Reporting by Siddarth S and Khushi Singh in Bengaluru; Editing by Maju Samuel and Emelia Sithole-Matarise)