Stocks continue to rise despite inflation concerns

UK jobs data highlights shrinking spending power for consumers, although stocks care little as they push higher once again.

Stocks push higher as miners lead the way

“Early European optimism have been somewhat stifled this afternoon, as the likes of the DAX and FTSE 100 head lower into the close.  For the FTSE 100, GBPUSD weakness this morning helped drive outperformance that is subsequently being unwound as the pound pushes higher. FTSE miners have enjoyed a welcome boost in the wake of a bumper set of earnings from BHP that saw record profits for the year, driven by record highs in the commodity space. While economic concerns have brought volatility in the commodity space, the recent Russia-Ukraine has helped drive demand for alternate energy such as coal and gas. While the recessionary environment does raise questions for the year ahead, the forward-looking nature of markets should mean that investors look beyond any short-term weakening in favour of a 2024 recovery.”

UK wages contract as prices outstrip income growth  

“The latest jobs data provided grounds for both optimism and concern, with many concentrating on the collapse in real wages that was always a given thanks to a 40-year high for inflation. While July saw a record collapse in inflation adjusted wages, that comes off the back of a higher-than-expected average earnings figure that will cause concern at Threadneedle street. Thankfully, the UK is yet to see any significant pick-up in unemployment, thus ensuring that the current ‘technical recession’ remains someway off a fully blown recession with widespread job losses. A late pop for the pound provides a nod to the fact that markets can now turn their attention toward tomorrow’s crucial inflation readings that have the possibility of seeing the first double-digit CPI figure in over 40-years. Unfortunately, Liz Truss appears unwilling to consider a freeze on the energy price cap, thus ensuring an upward trajectory for UK prices as we march towards the BoE target of 13.3% in October. ”