- UK and European stocks open lower as volatility returns.
- UK wage growth offers mixed signals but still too hot for rate cuts.
- US markets claw back some of Friday’s losses.
- US banks kick off earnings season.
- Oil dips but conflicting forces keep prices from swinging too far.
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
“UK stocks opened lower this morning, tracking declines across Europe as trade tensions creep back into focus. After a stretch of relative calm, headline risk is making conditions jumpy again and markets are back in the web of reacting to social media posts. But with earnings season kicking off, both at home and across the pond, there are more traditional catalysts on the horizon.
This morning’s UK wage growth data has left investors to mull over some mixed signals. Private sector pay, excluding bonuses, slowed slightly, but overall earnings still rose 5.0% in the three months to August. That pace is far too hot for the Bank of England to feel comfortable, meaning rate cuts look unlikely before 2026. For companies, higher wages keep cost pressures alive, while for households, real pay is creeping higher. This offers a slow but steady boost to affordability – good news for mortgage lenders and a small tailwind for housing demand in what remains a gusty market.
Wall Street clawed back some losses after Friday’s tariff scare fizzled, but volatility is back on the menu as US-China relations keep investors on edge. A mix of worries from government shutdown chatter, trade tensions, and a fresh earnings season have kept many on the sidelines as trading volumes have been lower than expected.
US earnings season kicks off today with the major banks looking to set a positive tone for the season. Investors are hoping for a strong showing from investment banking, which has been a shining light for the sector in recent quarters. The big watchpoint will be credit quality trends, a key health check for the economy and a signal on whether consumer and corporate stress is starting to build.
Oil prices slipped this morning, erasing earlier gains as traders weighed fresh headlines on US–China trade talks. Hopes for a diplomatic thaw were tempered by geopolitical jitters after Washington floated plans to arm Ukraine with long-range missiles, stoking fears of Russian supply disruptions. Still, any upside was capped by easing Middle East tensions and nagging concerns over a supply frenzy from rising output.”
