Toyota Lifts Wages, FTSE Highest Since May

Equities

The FTSE 100 made significant gains, rising 1% to its highest close since May 2023, as recent data showed a slowdown in UK wage growth. This development stirred expectations that the Bank of England might ease monetary policy earlier than previously anticipated. This uplift in the FTSE was supported by a decline in both the pound and bond yields following the wage growth report.

Persimmon stood out with the stock falling 3.7% after it warned of challenging market conditions expected to persist throughout the year. Meanwhile, the broader market saw rate-sensitive sectors like banks and life insurers leading gains, each climbing over 2%.

Across the pond in the US, the stock market reacted positively to the latest inflation data. The S&P 500 surged to a new record high, with a notable jump of 1.12%, reflecting investor optimism. Oracle contributed significantly to this upbeat sentiment, with its shares skyrocketing. The Dow Jones Industrial Average and the Nasdaq Composite also enjoyed substantial gains, rising 0.61% and 1.54%, respectively. These movements were spurred by the latest consumer price index report, which indicated a 0.4% rise in inflation due to increased costs for gasoline and shelter.

Forex & Commodities

Following the release of hotter-than-expected US inflation data for February, the US dollar saw an increase in its value, indicating a slightly reduced likelihood of an immediate Federal Reserve rate cut in June. The inflation report, showing a 0.4% rise in the Consumer Price Index (CPI) both monthly and year-on-year, led to a volatile trading session with the dollar index eventually climbing by 0.2% to 102.95.

In contrast, the yen weakened against the dollar after the Bank of Japan presented a dim view of the country's economic prospects, impacting future monetary policy considerations.

In the commodities sector, gold prices dropped by more than 1%, moving away from a recent peak, in response to the inflation report which dampened expectations for a near-term rate cut by the Federal Reserve. Spot gold was down 1.4% at $2,153.05 per ounce.

Oil prices, on the other hand, moved upwards, buoyed by expectations of strong global demand and forecasts by the Organization of the Petroleum Exporting Countries (OPEC) of robust oil demand growth. Brent futures and West Texas Intermediate crude both saw increases in their prices, rising by 0.3% and 0.4% respectively.