Global stocks are on the retreat, after the Senate leader alluded to the possible inclusion of an Obamacare repeal within the tax reforms, thus increasing the complexity and reducing the chances of a swift resolution. Meanwhile, a welcome degree of stability in UK jobs has kept real wages steady
FTSE hits six-week low as chances of swift US tax cuts lessen
Risk-off play sees havens prosper
UK jobs provide welcome respite from real wages deterioration
The stock selloff has continued apace this morning, with the FTSE hitting a six-week low despite a solid batch of UK employment figures. The deterioration in global stocks clearly has a footing in last week’s Senate announcement that we may not see a US corporate tax cut until 2019. However, the worst may not be over yet. With Senate Majority leader Mitch McConnell hoping to add a repeal of the ‘individual mandate’ into the bill as a way to undermine Obamacare, the pathway to tax reform just got more complicated. With a possible military coup in Zimbabwe, alongside widespread selling for global stock markets, it comes as no surprise that the havens such as gold and the Yen are coming back
The UK received a welcome boost, with a robust set of jobs numbers proving that the jobs market remains in relatively rude health despite the Brexit shaped cloud looming overhead. After yesterday’s 3% CPI reading, today’s steady 2.2% average earnings figure has proved welcome, with the decline in real wages having been curtailed for the short term at least. With inflation expected to remain elevated for months yet, the ability of employers to continue raising wages will be key in determining whether the UK consumers will begin to feel the pinch as the likeliness of a ‘hard Brexit’ intensifies.
Ahead of the open we expect the Dow Jones to open 116 points lower, at 23,293.
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