Susannah Streeter, head of money and markets, Hargreaves Lansdown:
‘’London’s blue-chip index has powered higher, as a relief wave cascaded over markets amid hopes for earlier interest rate cuts in the US. The latest snapshot of the weakening labour market fired up stocks on Wall Street, and positive sentiment is washing over the FTSE 100, which passed the 8200 mark for the first time today.
It comes amid signs of a weakening labour market with fewer staff being taken on by American employers than expected. Non-farm payrolls increased by 175,000 in April compared to the forecast 243,000. Wage growth was also more fragile, with average hourly earnings rising by just 0.2% month on month.
With overall US economic output also slowing my more than expected in the first quarter, hopes are riding high that that this era of painfully high borrowing costs might start to come to an end, sooner rather than later. There had been some fears that the Fed might shy away from rate cuts this year, in the face of stubborn inflation, but the data is now indicating that disinflationary forces are descending more quickly.
The FTSE 100 fluctuated a little in afternoon trade, as the dollar weakened, and the pound strengthened, which affects the earnings of multinational companies listed in London. But sterling lost gains and sentiment has broadly stayed positive. Housebuilders have been among the top risers on the index today, as investors assess their prospects in a lower interest rate environment. While speculation will continue over just when interest rate cuts will come and is set to cause some volatility, the FTSE 100 is demonstrating that it’s got its mojo back.”
